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MIP Scoreboard

The MIP alert mechanism consists of an economic reading of a scoreboard with 14 indicators covering the major areas of macroeconomic imbalances and adjustment issues. The aim of the alert mechanism is to act as a filter and identify for which countries a more in-depth study into the risks of potential imbalances is required.

Overview

The MIP's alert mechanism consists of an economic reading of a scoreboard with 14 headline indicators, with respective alert thresholds, covering the major areas of macroeconomic imbalances and adjustment issues presented in an annual Alert Mechanism Report (AMR). The reading of headline indicators is complemented by twenty-five auxiliary indicators without indicative threshold and providing additional relevant information. The composition of the scoreboard indicators may, and has, evolved over time. The initial scoreboard established in 2011 contained 10 indicators. An additional financial sector indicator was added in 2012 and three more indicators relating to labour market adjustment issues were added in 2015.

The economic reading of the scoreboard indicators implies that there is no automaticity in terms of conclusions (i.e. a "flash" for an indicator does not lead to an automatic conclusion that there is a risk of an imbalance that needs further investigation) and that any other relevant information is also taken into account (which is explicitly expressed in the regulation and supported by a large set of additional so called reading indicators). The choice of indicators in the scoreboard focuses on the most relevant dimensions of macroeconomic imbalances, competitiveness  and adjustment issues. For this reason, the scoreboard consists of indicators related to external balances, competitiveness positions, internal imbalances and labour and social adjustment issues.  

Beyond being an analytical tool, the scoreboard also has an important communication role. Therefore the scoreboard consists of a limited number of indicators. Moreover, the indicators and data 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, competitiveness and adjustment issues at an early stage, 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. Finally, the main scoreboard is complemented by a large set of auxiliary "reading indicators" that are used to better inform the screening process.

Scoreboard Indicators

The headline indicators consist of the following fourteen 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 14%;
  • 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%;
  • 3 years change in p.p. of the activity rate, with a threshold of -0.2%;
  • 3 year change in p.p. of the long-term unemployment rate, with a threshold of +0.5%;
  • 3 year change in p.p. of the youth unemployment rate, with a threshold of +2%.

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 2016"

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