not certainties. making forecasts is a difficult business. in the mid - 1800s it was predicted that the city of new york would be buried in horse manure by 1910 at the latest – but then came the automobile. and not everyone initially believed in the success of the motor car either. kaiser wilhelm ii put his faith in the horse, playing down the automobile as “ only a temporary phenomenon ”. and even gottlieb daimler predicted that “ global demand for motorvehicles will not exceed one million – if only because of the lack of available chauffeurs. ” what i want to say is that forecasts – long - term forecasts in particular – should always be treated with caution. but short - term forecasts, too, can quickly become worthless if unforeseen events occur – for forecasts are not prophecies. bis central bankers ’ speeches if things turn out the way we expect them to, the german economy will grow considerably faster than the economy of most other euro - area countries. nor are prospects brightening up for germany alone. most of the crisis countries, if they haven ’ t yet put recession behind them, can at least see the light at the end of the tunnel. another positive factor is that the heterogeneity in the euro area as regards economic growth, which was still very pronounced in 2011, has declined significantly over the last two years. going by the european commission ’ s 2013 autumn forecast, the growth disparities will continue to decrease substantially in the current year. amongst other things, the fact that the differences in economic growth rates have narrowed further of late is proof of the success of the adjustment measures in the crisis countries. however, the individual countries still differ in terms of their position in the economic cycle. this represents a challenge for the eurosystem, our common central banking system. this is because the ecb governing council, to which i belong as president of the bundesbank, can only make one common monetary policy – for the entire euro area. in the deployment of our instruments we cannot make allowances for the economic situation of individual member countries. we knew that when we embarked upon monetary union, and that ’ s why, for example, there can only be one policy rate for the entire euro area. one consequence of divergences in the economic situation is the diversity of inflation rates in the euro - area countries. it is not surprising that consumer prices in germany are rising somewhat more quickly

which is founded on individual national responsibility and the principle of liability. it is undisputed in the ecb governing council that the eurosystem ’ s crisis measures cannot replace either the adjustment measures that need to be implemented nationally or the essential reforms at the institutional level. the peripheral euro - area countries have made impressive progress in adjusting their economies in recent years, and their efforts to implement structural reforms are gradually bearing fruit. the peripheral countries have largely reduced their high current account deficits, and some are now running a surplus. huge strides have been made in boosting price competitiveness, which is driving exports higher. apart from italy, the peripheral countries have seen their national unit labour costs diminish substantially. structural budget deficits have contracted sharply. bis central bankers ’ speeches all in all, it is safe to say that the adjustment process is in full swing, with some countries being further advanced than others. a leading group of countries is already within sight of the finishing line, while others still have quite a way to go. the crisis is not yet over for any of the peripheral countries. the high levels of unemployment across many countries undoubtedly paint a gloomy picture. but the jobless figures at least appear to be levelling off, and they are already improving slightly in some countries. high levels of unemployment certainly owe something to the economic adjustment process. yet the notion that the labour market would be better off without adjustment does not hold water. the reforms form the basis for the economic turnaround and thus for an upturn in employment as well. incidentally, the improvement in the peripheral countries ’ current account positions was mirrored by a drop in german surpluses with these countries. so it is misleading for nobel prize - winning us economist paul krugman to claim that “ germany failed to make any adjustment at all ; deficits in spain, greece and elsewhere shrank, but germany ’ s surplus didn ’ t. ” germany ’ s current account surplus of around 7 % of gdp is still very high – that much is true. but these surpluses are now being generated predominantly outside the euro area. the current account surplus with other euro - area countries, meanwhile, is down by half compared to 2007. so germany is very much playing a role in rectifying imbalances across the euro area. but spurring domestic demand in germany – something which has been called for on numerous occasions, most recently by the us treasury secretary last week here in berlin – would be of no great benefit,