john hurley : economic developments in ireland and other issues opening statement by mr john hurley, governor of the central bank and financial services authority of ireland, at the presentation of the annual report 2002, dublin, 23 june 2003. * * * the international context for the irish economy has been difficult for some time. the expected pick - up in economic growth internationally has failed to materialise, primarily due to a series of adverse shocks. growth in the us, though weak, is still better than that of the euro area where economic performance has been disappointing. it would now appear that the euro area recovery will not begin to gather pace until early 2004. against this background, it is not surprising that economic growth in ireland has decelerated sharply over the past few years. real gnp growth last year was only 0. 6 per cent. our forecast at this point for the irish economy this year is for gnp growth of about 1½ percent ( gdp 2¾ per cent ). this represents a small downward revision of the gnp forecast of 1¾ per cent ( gdp 3¾ per cent ) in the spring bulletin ; the revision reflects the postponement of a global recovery. our gnp forecast is an improvement on last year, but it is still well below potential growth. on balance, the economy has been performing as well as can be expected in this difficult global environment and after a period of domestic overheating. while growth was modest last year, nonetheless, the economy has retained the substantial gains in living standards and employment achieved since 1994. between 1994 and 2001, gnp and employment growth averaged 8 per cent and 5 per cent a year, respectively. to date, the irish economy has proved to be fairly resilient in the face of the weaker international economy. there is now a greater degree of flexibility in the economy than in previous years and this is essential in a less benign economic environment. even though the economy has, to date, performed relatively well, there are a number of significant risks to the resumption of trend growth. apart from the weak international economy, there are issues of deteriorating competitiveness driven by domestic inflation and a rapidly appreciating euro ; since the start of 2002 the euro has appreciated by 32 per cent and 14 per cent against the us dollar and sterling, respectively. the threats to competitiveness have become more stark, with the irish price level currently estimated to be some 12 per cent higher than that of the euro area as a whole. although our inflation

sluggishness of the real economy : without a sustained recovery, inflation risks being pushed well below the target, opening up a scenario that would be difficult for monetary policy to counteract and should therefore be avoided. tommaso zerbi opened the italian constituent assembly meeting of 19 may 1947, during which article 47 of the constitution was discussed and approved, recalling ‘ the cry of millions and millions of small italian savers, the tragedy – without exaggeration – of our entire generation of small savers, who in the last 30 years or so have seen the purchasing power of the lira fall to one one - hundred - and - fortieth of its value in 1913 or to one thirty - fifth of its value in the period between the first and the second world war ’ ( see constituent assembly, session of 19 may 1947, p. 4025 ; only in italian ). 4. financial stability financial stability is the third pillar in the protection of savings. financial crises pose a severe threat to savers because of the destruction of wealth they bring about. 18 banks over the previous decade, italy ’ s banking system suffered the consequences of two recessions within a few years. between 2008 and 2014, gdp fell by 9 per cent, leading to an increase in business bankruptcies and unemployment. 19 non - performing loans rose to 10 per cent of total loans. banks suffered sizeable losses, which in many cases resulted in outright banking crises. that is now a distant memory. the banking system is currently well capitalized and profitable. the stock market valuations of the main financial intermediaries exceed their book values ( figure 4 ), signalling investor confidence in banks ’ ability to generate income in the future. these improvements reflect the efficiency gains achieved by financial intermediaries and the strengthening of prudential rules, as well as the favourable conditions of recent years. 20 public aid during the pandemic crisis, including the expansion of state guarantees on loans to small and medium - sized enterprises, played an important in italy, the global financial crisis of 2007 - 09 led to a drop in equity prices of almost 70 per cent, followed by a slow and partial recovery. the sovereign debt crisis caused further losses, coupled with a sharp fall in house prices. in that period, yearly bankruptcies doubled to more than 15, 000 ; the unemployment rate rose by over 6 percentage points, to 12. 9 per cent. in recent years, the european financial system has been characterized by ample liquidity