survey indicators suggest that real gdp growth remained positive. the euro area benefited from a steady recovery in global demand throughout 2009, driven in part by the monetary and fiscal policy stimuli in most of the world ’ s regions since the beginning of the recession, as well as by modest improvements in confidence. activity has also been boosted by a reversal of the inventory cycle. but growth remains sluggish, reflecting the ongoing balance sheet adjustments in the euro area and elsewhere. this process has not only affected the financial sector, but also households, which have cut back consumption and increased their savings, and firms, which have restrained their investment spending. the key question now concerns the economic recovery, its strength and fragilities. let me start with a comment of a general nature. i have the impression that many people, whether in the business sector, the financial markets, or in academic and political circles, think that the post - crisis world will be quite similar to the pre - crisis one in 2006 – 2007. in other words, they expect the economic recovery to bring us back to where we were before the crisis. my feeling is that those who think like that are deluding themselves. the pre - crisis situation was not in equilibrium. it was not sustainable. the crisis occurred precisely because the situation was unsustainable, both within certain countries and globally. if the world economy were to return to the pre - crisis situation, within a short time span a new crisis would be likely to occur because the same imbalances that led to the crisis would build up again. considering some recent developments and behaviour, and considering the way certain policies are being discussed and the thinking of some key players, such a scenario does not seem that unlikely. i think that it would be a big mistake to regard the recession we experienced in 2008 and 2009 as just a somewhat sharper cyclical downturn. there has been a major structural shift in our economies. once the crisis is over, the world economy will look very different. this is true not only for the overall aggregates, but also for individual enterprises. the longer people take to recognise it, the more difficult it will be to recover. some would say that it is useless to make forecasts under the current circumstances, given the state of uncertainty. i don ’ t think so. after all, economic agents – individuals, households, companies, financial institutions – have to have some idea about the future in order to take their day - to - day decisions on investment,

to this issue shortly. second, the dramatic drop in economic activity could have lingering effects on potential and actual output. there are several sectors of the economy where activity is unlikely to return to pre - crisis levels because of structural shifts in the composition of world demand or permanent changes in relative prices. the construction and automotive sectors are perhaps the most obvious examples. third, the increase in public debt and the cost of servicing it may crowd out private spending. this risk is not apparent yet because of the fall in private investment. however, as the recovery picks up, the pressure on financing both private investment and public spending will mount. fourth, the slower the recovery, the greater the impact on unemployment, which may in turn affect confidence and thus reduce spending and heighten uncertainty. finally, supply shocks stemming from rises in commodity prices cannot be ruled out. on the domestic side, a continued need to repair balance sheets in various sectors will affect the outlook, as it did in 2009. in the near term, uncertain labour market prospects might also continue to constrain household spending. indeed, while the recession may have ended in terms of gdp contraction, we should bear in mind that employment growth typically lags business cycle fluctuations. moreover, there are reasons for believing that such lags may be more pronounced in the current context. many euro area governments implemented special working time schemes – such as germany ’ s kurzarbeit programme – as the economic crisis unfolded, in an attempt to prevent a sharp rise in unemployment and to smooth the process of adjustment. but if capacity utilisation remains at low levels, job losses may increase further as the impacts of these schemes fade. the pace of private consumption will be affected by employment prospects. concerning private investment, the pace of contraction is expected to slow over the year. but business investment is likely to be held back by low capacity utilisation, weak demand, high uncertainty and depressed profits. as i said earlier, this – or any other scenario – is surrounded by high uncertainty. there are several risk factors. i will not mention all of them. i would like to consider one which may be relevant for you, related to the financing conditions of companies. during the financial crisis, there was a sharp fall in bank loans to non - financial corporations, partly reflecting banks ’ balance sheet difficulties, and partly the plummeting loan demand. it seems that some firms have replaced some of their bank financing with market - based financing, as was reflected in the strong recourse