Quarterly Bulletin Q3 2013

Developments in the International
and Euro Area Economy
Quarterly Bulletin 03 / July 13
65
the higher end of the central bank’s target of 4.5
per cent plus or minus 2 percentage points. The
central bank’s main policy rate, the Selic, was
increased by 25 basis points in April and by 50
basis points to 8.0 per cent in May.
In India, GDP at factor cost increased by 4.8
per cent on a year-on-year basis during the first
quarter of 2013, little changed from the 4.7 per
cent increase recorded during the fourth quarter
of 2012. Inflation, as measured on an annualised
basis by the wholesale price index, dropped
from close to 6 per cent in March to 4.9 per cent
in April and coincided with a drop in fuel and
power prices. The Reserve Bank of India cut
its key policy rate by 25 basis points in March
and again in May to 7.25 per cent. In Russia,
activity continued to slow and according to the
flash estimate GDP expanded by 1.6 per cent
on an annualised basis during the first quarter
of 2013, following growth of 2.1 per cent in the
final quarter of 2012. Inflation remains high and
increased from 7 per cent in March to 7.4 per
cent in May, driven mostly by food prices.
Box B: Comparing household saving patterns in the euro area periphery against those in the rest of the
euro area
By David Purdue 1
The euro area household savings rate (as a percentage of disposable income) has fallen below
pre-crisis levels in recent years. Although the savings rate rose in the immediate aftermath of the
financial crisis, it has subsequently fallen back to around 13 per cent, slightly below the average
of 14.3 per cent for the euro area pre crisis. When we break down the euro area household
savings rate into a periphery 2 and a rest of euro area component, it is clear that the fall in the
periphery’s savings rate has weighed on the euro area aggregate in recent years (Chart 1) 3 . This
box uses quarterly integrated euro area accounts data to compare the changes in volume and
composition of household savings in the euro area periphery against the rest of the euro area.
Box B Chart 1: Savings Rate
16
As Percentage of Disposable Income
15
14
13
12
11
10
Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Euro Area
Periphery
Rest of Euro Area
Source: ECB SDW Website.
1 Monetary Policy Division.
2 The periphery is defined as Ireland, Italy, Portugal and Spain. Relevant data for Greece are unavailable and are therefore
included in the residual rest of the euro area.
3 The developments in the savings rate are caused primarily by developments in savings and not disposable income. Euro
area savings (on a four quarter accumulated sum basis) rose by 15 per cent from Q1 2007 to Q4 2009 and have
subsequently fallen back to Q1 2007 levels while disposable income increased by 6 per cent from 2007 to 2009, on a four
quarter accumulated sum basis, and by a further 3 per cent from 2010 to 2012.