compared with the forecast 4¾ per cent. in contrast, growth in aggregate output – at a below - trend rate of 2¼ per cent – was slower than we had expected. when we look at why output growth over 2011 was not as strong as forecast, well over half of the difference is accounted for by unexpectedly weak growth in exports, particularly of coal. it has taken longer than was originally expected to remove water from the flooded coal mines and for firms to take advantage of increases in port and rail capacity. as a result, despite all the talk about australia ’ s resources boom, the volume of resource exports increased by only 1 per cent over 2011. a much stronger outcome than this is likely both this year and next. bis central bankers ’ speeches but exports are, by no means, the full story. other factors were also at work, with more of the strong growth in domestic demand being met through overseas production – rather than domestic production – than was originally expected. an important factor here has been the composition of the growth in demand. as i mentioned a moment ago, growth in aggregate demand was pretty close to what was expected. however, the composition of that growth contained a few surprises. in particular, while the reserve bank had long expected a very large lift in investment in the resources sector in 2011 – and this indeed occurred – the increase was even larger than had been forecast. as one indication of the very strong outcome, the abs estimates that engineering investment increased by almost 50 per cent over 2011. on the other hand, growth in demand not directly related to mining investment was not as strong as was forecast. the biggest surprise was probably in terms of home building. we had expected dwelling approvals to pick up gradually over 2011, but this pick - up did not eventuate. one possible explanation for this is that it is one of the side effects of a return to more traditional savings and borrowing behaviour by households. this change in behaviour is having ripple effects through the economy, including through a lowering of expected capital gains on housing. this has made developers, financiers and households less willing to commit to new construction despite rising rental yields, lower prices relative to income and ongoing growth in population. while, at some point, the improving fundamentals should generate a pick - up in home building, the recent forward - looking indicators do not suggest that this is imminent. another other area that was weaker than expected was private business investment outside the resources sector. this partly reflects the decline in business confidence

panayotis thomopoulos : anti - inflationary exchange rate policy in greece in the 1990s speech by mr panayotis thomopoulos, deputy governor of the bank of greece, at the euromediterranean seminar, eurosystem and mediterranean country national central banks, organised by the bank of italy and the european central bank, naples, 14 - 15 january 2004. * * * i would like to thank the ecb and the bank of italy for the successful organization of this meeting. greece has been for more than three thousand years at the cross - roads between north, south and eastern mediterranean countries and, we greeks have been able to enrich our culture and ideas from our relationship with all the nations around the table and i am sure that to - day ’ s exchange of experiences will be to the mutual benefit of all present. i look forward to an even closer cooperation in the future between the eurosystem, with the ecb taking the appropriate initiative, and the rest of the central banks from the other regions of the mediterranean. when the maastricht treaty was signed, greece was meeting all the criteria of a country in crisis. stagflation, with mounting macro - economic imbalances, were the main characteristics of the economy. in the 15 years up to 1993, average inflation was almost 17 %, gdp growth was barely 1 % per annum, while the fiscal deficit was creeping upwards reaching some 13, 5 % of gdp by 1993 and pulling up the debt - to - gdp ratio to over 110 %. it was, therefore, not surprising that the government ’ s commitment to prepare greece for the satisfaction of the maastricht criteria in 1999 and membership of the euroarea by 2001 ( 2 years after its creation ) was received with disbelief by almost all foreign and domestic observers. from the beginning of 1994, when the new stability oriented policy was initiated, a managed exchange rate was a key policy plank in the stabilization process and contributed importantly to disciplining economic agents and setting in motion wage and price restraint, which brought the rate of inflation down to some 2 % on average in the twelve months to early 2000 thus making possible our euroarea membership. between end 1994 and early 1998, i. e. in the period preceding our erm i membership, the bank of greece and the government had decided to follow a policy of managing the exchange rate by not allowing the drachma to depreciate as fast as was needed to compensate for