going large - scale maintenance and safety upgrades at energy companies posed a considerable drag on recovery throughout 2013. this impact was concentrated in the third quarter, when the largest coordinated maintenance upgrades occurred. activity in the non - energy sector, though slow and steady, provided critical support which kept the economy from veering off track. this performance continued into the first three months of 2014, although the rebound in the energy sector in the fourth quarter of 2013 did not fully carry over into early 2014. two events temporarily affected energy production in the first two months of 2014 – bptt took down its savonette platform to accommodate drilling at another well and petrotrin undertook planned maintenance at its pointe - a - pierre oil refinery. however, energy output bounced back by march 2014. the non - energy sector maintained its growth momentum into 2014. local sales of cement – a key indicator of construction activity – showed a favorable outturn. the increase in construction activity reflected several on - going, large public sector projects, including the highway to point fortin, and, perhaps to a lesser extent, some private sector projects breaking ground, such as... the “ c3 ” movie and shopping complex in corinth, south trinidad. new car sales are still hitting double - digit rates. also, higher crop production under the caroni green initiative is supporting growth in the agricultural sector. a key mandate of the central bank is price stability, which roughly translates into keeping underlying inflationary pressures well contained. inflationary pressures have remained subdued so far in 2014. headline inflation slowed to just under 3½ percent by april 2014. this ease in inflation was largely associated with a steady fall in food price inflation to single digit territory. falling food prices reflected improved domestic agricultural output, better domestic weather conditions, and an easing of global food prices. bis central bankers ’ speeches meanwhile core inflation, which excludes food prices, picked up slightly, to around 2½ percent, but remained stable in the first four months of 2014. this is indicative of improving economic activity. we are also starting to see a pick - up in business lending. after contracting for an entire year, business loans granted by the banking system rose by a little over 2 percent in february this year and further increased by almost 3½ percent in march. we have also seen relatively robust growth in consumer lending, especially for purchases of motor vehicles, home renovation and debt consolidation. record low mortgage rates continue to spur demand for real estate mortgage financing. although such loans continue to record

cent for ireland, 217 and 4 per cent for greece. in 2007, at the beginning of the crisis, the public debt ratio was just 62. 7 % in portugal, 46. 4 % in spain and 26. 6 % in ireland, in all cases well below the euro area average. nevertheless, the increase in total debt, both public and private, was associated with various destabilizing developments, ranging from rising asset prices to losses of wage and price competitiveness. clearly, the euro area needed a framework to monitor macroeconomic imbalances and suffered from its absence. 2. responses to the crisis so how has europe incorporated these lessons into its policy responses to the crisis? it is useful to conceive of the european response in two phases. first, europe has had to respond to what might be called the acute challenges, by which i mean the shifts in investor sentiment and market psychology that have led to market panic and cross - border contagion. these had to be addressed to manage the on - going crisis. second, it has had to respond to the systemic aspects of the crisis, by which i mean the underlying economic and institutional weaknesses that have led these acute effects to appear. these have to be addressed to find a sustainable solution to the crisis and prevent a re - emergence. a. acute challenges the acute challenges have been addressed, first and foremost, by establishing crisis management tools at the european level. this included the temporary european financial stability facility and mechanism in may 2010 and more recently the permanent european stability mechanism. their significance cannot be overstated. financial support can now be given swiftly and efficiently, conditional on strong macroeconomic adjustment. this arrangement maintains the core principle that member states are responsible for their economic policies, while at the same time removing the tail risk of a self - fulfilling within the excessive deficit procedure of the stability and growth pact. bis central bankers ’ speeches liquidity / solvency crisis. this partly remedies the lack of a ‘ federal ’ shock absorber, while not altering the fundamental balance of competencies within the euro area, which would require fundamental treaty changes. the capacity of these arrangements also ensures sufficient scope for support. the esm is a permanent institution that can raise up to 500 billion euros in financial markets – actually, one of the world ’ s largest and most flexible international financial institutions. b. systemic challenges as regards the systemic aspects of the crisis – the underlying economic and institutional challenges that lie at the heart of europe ’ s current