mario draghi : monetary policy and the outlook for the economy speech by mr mario draghi, president of the european central bank, at the frankfurt european banking congress “ europe into a new era – how to seize the opportunities ”, frankfurt am main, 17 november 2017. * * * today i would like to describe how the euro area economy is developing and explain our latest monetary policy decisions. the economic recovery is continuing but inflation developments remain subdued. so, while we are confident in the recovery, we still need a patient and persistent approach to our monetary policy to ensure that medium - term price stability is achieved. the euro area economic recovery the euro area is in the midst of a solid economic expansion. gdp has risen for 18 straight quarters, with the latest data and surveys pointing to unabated growth momentum in the period ahead. from the ecb ’ s perspective, we have increasing confidence that the recovery is robust and that this momentum will continue going forward. there are three factors in particular that suggest this. first, the major headwinds that were weighing on the recovery in recent years have now largely dissipated, although downside risks still remain related to external factors. for some years global growth and world trade have been a drag on the recovery. now, we are seeing signs of a sustained expansion. global pmis remain strong. the share of countries in which growth has been improving relative to the previous three years has risen from 20 % in mid2016 to 60 % today. and this has fed through into a rebound in world trade, which is growing at its strongest annual rate in six years, and may well become a tailwind going forward. domestically, a key headwind in the past has been the necessary deleveraging by firms and households. but this is also now diminishing as debt returns to more sustainable levels. for the euro area, gross corporate debt1 to value added is now roughly back to its pre - crisis level. in vulnerable countries the decline has been steeper. in spain, corporate debt has fallen from 215 % of gross value added in early 2012 to close to 150 % today – the same level it had at the end of 2004. italian firms have seen their debt ratio fall by around 30 percentage points since end 2012, returning to the same level as in mid - 2007. 2 for households, gross indebtedness is also edging down and now stands just below its mid2008 level. and importantly for the recovery, household deleveraging is

. but we still need to see further evidence that inflation dynamics are moving in the right direction. so monetary policy will remain patient, persistent and prudent. 1 draghi, m. ( 2017 ), “ accompanying the economic recovery ”, speech at the ecb forum on central banking, sintra, 27 june 2017. 2 this relationship is based on evidence from france and finland in the 1980s and 1990s. for similar evidence from the united states, see mccarthy j. ( 2017 ), discretionary services spending has finally made it back ( to 2007 ), liberty street economics, federal reserve bank of new york. 3 data until 2017q3. 4 updated on 16 march 2018 : mario draghi mistakenly referred to the period 2016 to 2019, whereas the correct period is 2016 to 2020. 5 for further details, see box 7 entitled “ the relationship between hicp inflation and hicp inflation excluding energy and food ”, ecb economic bulletin, issue 2 / 2016. 6 see “ low inflation in the euro area : causes and consequences ”, ecb occasional paper series, no 181, january 2017. 7 bodnar, k. ( 2018 ), “ labour supply and employment growth ”, ecb economic bulletin, issue 1 / 2018. 8 all data on wages, productivity and gdp deflator components are until 2017q3. 9 see speech by mario draghi, monetary policy communication in turbulent times, at the conference de nederlandsche bank 200 years : central banking in the next two decades, amsterdam, 24 april 2014. 6 / 6 bis central bankers'speeches