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MIP Scoreboard

The early warning system draws on a scoreboard consisting of a set of eleven indicators covering the major sources of macroeconomic imbalances, implemented by in economic reading thereof. The aim of the scoreboard is to trigger in-depth studies which will do deep dive analyses to determine whether the potential imbalances identified in the early-warning system are benign or problematic.

Overview

The MIP's alert mechanism consists of an indicator-based scoreboard complemented by an economic reading thereof presented in an annual Alert Mechanism Report (AMR). The composition of the scoreboard indicators may evolve over time. The Commission may organise missions, with the ECB if appropriate, to conduct the in-depth reviews which shall be made public.

The economic reading of the scoreboard indicators implies that there is no automaticity involved (i.e. a "flash" for an indicator does not lead to an automatic conclusion that there is an imbalance) and that any other relevant information can also be taken into account (which is explicitly expressed in the regulation). The choice of indicators in the scoreboard focuses on the most relevant dimensions of macroeconomic imbalances and competitiveness losses, with a particular focus on the smooth functioning of the euro area. For this reason, the scoreboard consists of indicators which can monitor external balances, competitiveness positions and internal imbalances, and encompasses variables where both the economic literature and recent experiences suggest associations with economic crises.

The scoreboard also has an important communication role, therefore the scoreboard consists only of a limited number of indicators. Moreover, the indicators and transformations have been kept as simple and straightforward as possible. Given that the scoreboard (indicators and thresholds) need to provide signals of potentially harmful imbalances and competitiveness losses at an early stage of their emergence, a combination of stock and flow indicators which can capture both shorter-term rapid deteriorations as well as the longer term gradual accumulation of imbalances have been chosen. Moreover, indicative thresholds have been set that "flash" if passed, which on the one hand avoid excessive numbers of 'false alarms' but which on the other hand are not set so stringently that they only identify problems once they are entrenched.

Scoreboard Indicators

The headline indicators consist of the following eleven indicators and indicative thresholds, covering the major sources of macroeconomic imbalances:

  • 3 year backward moving average of the current account balance as percent of GDP, with  thresholds of +6% and -4% ;
  • net international investment position as percent of GDP, with a threshold of -35%;
  • 5 years percentage change of export market shares measured in values, with a threshold of -6%;
  • 3 years percentage change in nominal unit labour cost, with thresholds of +9% for euroarea countries and +12% for non-euroarea countries;
  • 3 years percentage change of the real effective exchange rates based on HICP/CPI deflators, relative to 41 other industrial countries, with thresholds of -/+5% for euroarea countries and -/+11% for non-euroarea countries;
  • private sector debt (consolidated) in % of GDP with a threshold of 133%;
  • private sector credit flow in % of GDP with a threshold of 15%;
  • year-on-year changes in house prices relative to a Eurostat consumption deflator, with a threshold of 6%;
  • general government sector debt in % of GDP with a threshold of 60%;
  • 3-year backward moving average of unemployment rate, with a threshold of 10%;
  • year-on-year changes in total financial sector liabilities, with a threshold of 16.5%.

The economic reading takes into account complementary additional indicators, as stipulated in Article 4.4 of Regulation (EU) No 1176/2011 and outlined in the Alert Mechanism Report. The list of 'scoreboard' and additional indicators was drafted and is regularly reviewed jointly with Member States and the ECB in the context of LIME, a working group of the Economic Policy Committee.

Data

Documents

Disclaimer

The European Commission maintains this website to enhance public access to information about the data used and presented in the framework of the Macroeconomic Imbalance Procedure (MIP) and the Alert Mechanism Report (AMR). The data therein are provided by EUROSTAT and European Commission services. We strive to keep this information timely and accurate. If errors are brought to our attention, we will try to correct them. It is our goal to minimize disruption caused by technical errors. However some data or information on our site may have been created or structured in files or formats that are not error-free and we cannot guarantee that our service will not be interrupted or otherwise affected by technical problems. The European Commission disclaims any responsibility with regard to such problems incurred as a result of using this site or any linked external sites.

When quoting data, please cite the following reference: "European Commission, Alert Mechanism Report 2014"

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