also reflects the fact that economic activity is expected to recover at a very gradual pace. the risks to the inflation outlook are broadly balanced. indicators of inflation expectations over the medium to longer term remain firmly anchored in line with the governing council ’ s aim of keeping inflation rates below, but close to, 2 % over the medium term. following the “ free fall ” in economic activity that we witnessed around the turn of the year, the euro area economy shows signs of stabilisation. after the strongly negative readings recorded earlier, economic activity in the second quarter of 2009 is estimated to have declined by 0. 1 %, compared with the previous quarter. in the period ahead, we expect to see a very gradual recovery. this expectation remains surrounded by high uncertainty, while risks to the outlook remain broadly balanced. on the upside, the impact of macroeconomic stimulus packages and other policy measures may be stronger than expected, confidence may improve more quickly, and foreign demand may prove to be stronger than currently foreseen. on the downside, the negative feedback between the real economy and the still strained financial sector may be stronger or more protracted than expected. concerns also relate to potential renewed commodity price rises, further protectionist pressures and persistent global imbalances. the assessment of low inflationary pressures over the medium term is also confirmed by our monetary analysis. in this context, we note in particular that money and credit expansion continues to decelerate. the annual growth rate of the broad monetary aggregate m3 declined to 2. 5 % in august, the lowest reading since the launch of the euro. as regards lending to the private sector, the annual growth rate of loans virtually stalled in august ( at 0. 1 % ). to a large extent, this development reflects the fall in production and trade and the ongoing uncertainty regarding the business outlook which has affected demand for financing. given that the pick - up in loans to enterprises typically lags the recovery in economic activity, further weak developments in loans to enterprises in the coming months appear likely. at the same time, lower market interest rates continue to be passed on in lower bank lending rates. this has led to a gradual improvement in financing conditions, which in turn is expected to support the demand for credit in the period ahead. it is against this background that the governing council views the current level of key ecb interest rates as appropriate. in addition, we have implemented five “ non - standard ” measures to enhance credit support, taking into account the major role played by

, diane coyle notes that the uk ’ s statistical abstract for 1871 – 85 – in retrospect, the height of the industrial revolution – devoted just 12 of the 200 pages on the economy ’ s output and trade to manufacturing and transport “ commentary : modernising economic statistics : why it matters, ” national institute economic review, no. 234 ( november 2015 ). robert j. gordon, the rise and fall of american growth ( princeton up ; 2016 ). see also : juan f. jimeno, frank smets and jonathan yiangou, “ secular stagnation : a view from the eurozone, ” secular stagnation : facts, causes and cures, ed. coen teulings and richard baldwin ( cepr, 2014 ). bart van ark, mary o ’ mahony and marcel p. timmer, “ the productivity gap between europe and the united states : trends and causes ”, the journal of economic perspectives, vol. 22, no. 1 ( winter, 2008 ), pp. 25 – 44. carol corrado, jonathan haskel, cecilia jona - lasinio and massi miliano iommi, innovation and intangible investment in europe, japan, and the united states, oxford review of economic policy, vol : 29 ( oxford, 2012 ), pp. 261 – 6. carl frey and michael osborne, the future of employment : how susceptible are jobs to computerisation? ( oxford, september 2013 ). bis central bankers ’ speeches skills in logistics, ( re - ) programming, and routine or basic maintenance. are our education systems ready for that challenge? moreover, what will happen to those who are displaced by new technologies? economic theory tells us that technological gains raise disposable income and hence create new demand somewhere in the economy. but as the literature on “ hollowing out ” has shown, technological advances may lead to a polarisation of jobs – at the expense of the middleskilled. 15 and this seems to be evident also in recent employment growth seen in the euro area, with the bulk of the recent employment growth seen concentrated in the lower productivity sectors. 16 so the risk is that the one effect offsets the other : technological advances in some sectors are neutralised by gains in employment in other, lower productivity ones. that might be damaging for social cohesion. this is why the second channel is crucial : across - firm productivity growth. 17 to combine productivity growth with full employment, it ’