mario draghi : introductory statement to the plenary debate of the european parliament on the european central bank's annual report 2016 introductory statement by mr mario draghi, president of the european central bank, to the plenary debate of the european parliament on the european central bank's annual report 2016, strasbourg, 5 february 2017. * * * mr president of the european parliament, mr vice - president of the commission, honourable members of the european parliament, i am very pleased to be here to discuss with you the ecb ’ s activities and your draft resolution on the ecb ’ s annual report 2016. today ’ s debate represents a good opportunity to take stock of progress made and discuss the way forward. a decade ago, the global financial crisis was starting. today, while further efforts are needed to overcome its legacy, the euro area economy is expanding and employment is rising. your draft resolution points out that monetary policy has played a key role in this recovery process. the ecb has indeed acted decisively, in line with its mandate. we have addressed financial fragmentation and supported the economy, enabling inflation to gradually converge towards our objective. the draft resolution also notes that the independence of the ecb has allowed us to take resolute action within our mandate. but independence is just one of the cornerstones of our institutional framework. accountability is its necessary counterpart. and you, as the representatives of the people of the eu, are the heart of our accountability. together, independence and accountability underpin our effectiveness and our legitimacy. in my remarks today, i will focus on two particular issues that have been raised in the draft resolution. first, i will elaborate on economic developments in the euro area and the role of the ecb ’ s monetary policy. second, i will discuss the state of the financial sector and the measures needed to further strengthen its resilience. economic developments and the role of the ecb ’ s monetary policy the euro area economy is expanding robustly, with stronger growth rates than previously expected and significantly above potential. according to preliminary data, euro area real gdp increased by 2. 5 % in 2017, compared to the 1. 7 % that had been foreseen in our december 2016 staff projections for the same year. the economic expansion is broad - based. the dispersion of growth rates across countries and across sectors is at its lowest level for 20 years. accordingly, we see positive growth in over 85 % of the sectors in the euro area economy, compared with

an historical average of 74 %. employment growth has recently strengthened as well in all the main sectors, namely in industry, construction and market services. these developments bode well for economic growth, as expansions tend to be stronger and more resilient when growth is broad - based. the number of people employed in the euro area has also increased by around 7. 5 million since 1 / 5 bis central bankers'speeches hitting a low in mid - 2013. employment has now reached its highest level since the introduction of the euro. the unemployment rate continues to decline and now stands at close to a nine - year low of 8. 7 %, down by 3. 3 percentage points from its highest level. as more people find jobs, household incomes rise. this has helped to strengthen private consumption growth, which in turn is boosting business investment. in addition, a number of other factors have supported investment. these factors include higher demand for euro area exports, rising corporate profitability and an increasing use of installed productive capacity. these positive developments have been fostered and reinforced by the pass - through of the ecb ’ s monetary policy measures, which have eased funding conditions for households and firms. small and medium - sized enterprises ( smes ) in particular have benefited from our policy measures. the growing inclusiveness of this economic expansion is partly due to the renewed vigour of small businesses, which are a key engine of income creation in our economy. while our confidence that inflation will converge towards our aim of below, but close to, 2 % has strengthened, we cannot yet declare victory on this front. after increasing to 2 % in early 2017 due to a rise in energy prices, headline inflation has fluctuated since may 2017 between 1. 3 % and 1. 5 %. measures of underlying inflation, which exclude the most volatile components, remained subdued and have yet to show convincing signs of a sustained upward trend. also, new headwinds have arisen from the recent volatility in the exchange rate, whose implications for the medium - term outlook for price stability require close monitoring. on the back of improved economic conditions, the financial stability situation in the euro area has also continued to evolve positively. as i will explain in more detail, for the time being we have little indication that generalised imbalances are emerging. overall, while we can be more confident about the path of inflation, patience and persistence with regard to monetary policy is still warranted for underlying inflation pressures to build up and