according to the european commission, the euro area average deficit ratio is projected to decrease to 4. 6 % of gdp in 2011 and 3. 9 % of gdp in 2012 under the customary no - policy - change assumption. this represents a sizeable improvement compared with the spring forecast, which stems mainly from expenditure measures announced or set out in more detail since then, in particular in the 2011 budgets. second, structural reforms should be introduced to increase wage flexibility and the adjustment of wages to appropriate levels. this could be achieved through measures to improve the functioning of labour markets, which would also facilitate the necessary transfer of workers from the non - traded to the traded sectors. in fact, we have already seen wagesetting developments in some european countries that many observers would have believed impossible just a few years ago. the adoption of measures to increase productivity growth is also essential. third, repairing the balance sheets of banks and making banks more resilient are crucial prerequisites for the resumption of growth and for financing the reallocation of resources from the non - tradable to the tradable sectors. many policy initiatives have already been taken in this respect, ranging from the establishment of “ bad banks ” to injections of capital and government guarantees ’ for bank debt. of course, the liquidity policy of the eurosystem has played a crucial role in supporting the financing of the overall economy since august 2007. effective regulation has a key role to play in strengthening the financial system in the longer term. preventing imbalances the experience of imbalances in the euro area in recent years, and the difficulties this has bequeathed, are convincing reminders that “ prevention is better than cure ”. the economic governance framework at the eu level has not performed this function effectively, and there is an urgent need to reinforce economic governance to arrest the build - up of imbalances at a sufficiently early stage. to this end, eu governments have agreed on a number of proposals to strengthen economic governance in the eu and the euro area. first, they have agreed to strengthen procedures for surveillance of fiscal policies, with a greater focus on government debt levels and new reputational, political and financial sanctions to enhance enforcement of recommendations. sanctions for excessive deficits will come much earlier than before. there is also an expectation that national fiscal rules and frameworks should be improved, although non - binding. government finance statistics will be improved by enhancing the auditing powers of eurostat and giving greater professional independence to the european

bank of japan ’ s march review of monetary and economic trends in japan bank of japan, monthly economic review, 18 / 3 / 97. a moderate economic recovery continues in japan as private demand shows increasing firmness. with respect to final demand, public - sector investment has decreased while net exports have continued on an increasing trend. housing investment has remained at a high level and business fixed investment is increasing steadily. a moderate recovery in personal consumption has continued on the whole, while passenger car sales have increased significantly. meanwhile, inventories on the whole are at appropriate levels. reflecting these developments, industrial production has shown a steady increase and labor conditions on the whole have continued to improve moderately. meanwhile, prices have stopped declining, and monetary aggregates have continued to grow at 3. 0 - 4. 0 per cent. with regard to personal consumption, sales at department stores and supermarkets are improving moderately, albeit with some fluctuations owing to such factors as weather conditions. outlays for travel have continued to increase. sales of electrical appliances are increasing on the whole, although the pace of growth in personal computers and cellular telephones has decelerated. passenger car sales have recorded buoyant two - digit growth year - toyear for five consecutive months since october 1996. among leading indicators of business fixed investment, machinery orders have increased steadily on average. they rose significantly in the fourth quarter 1996 and showed a marginal decline in january 1997 from the average of the fourth quarter. construction floor area has also continued to pick up moderately. with respect to housing investment, housing starts in terms of the seasonallyadjusted annual rate have continued to be at a high level, although they have decreased for three consecutive months owing to the reversal of the rise in demand ahead of the consumption tax rate hike. regarding public - sector investment, public works contracted showing developments in orders have decreased significantly since the end of 1996 compared to the high level recorded in the previous year, which reflected the large economic stimulus package. as for actual implementation of public works, with a time lag after orders, the seasonally - adjusted level of shipments of public - related goods increased until summer 1996, but has been decreasing since autumn 1996. real exports are on an increasing trend reflecting the moderate expansion of overseas economies and the effects of the yen ’ s depreciation since summer 1995. although real imports are increasing, reflecting such elements as the rise in domestic demand, the recent pace of increase has been moderate, a reflection of the depreciation of the