However, we are still far from achieving the employment levels prevailing before the crisis, given the enormous impact that it had on our labour market. Unlike in previous upturns, the growth of activity and employment is proving to be compatible with the ongoing correction of the economy’s imbalances. The more balanced and sustainable nature of the current recovery is closely related to the factors that have made it possible, some of which should be considered temporary while others may have a more persistent impact. I would like to refer to two central issues to explain this more balanced growth: the improvement in competitiveness and the normalisation of financial conditions. Competitiveness improvements One of the most important changes in the functioning of the Spanish economy since the crisis has been the recovery in external competitiveness. Cost and price adjustments have stimulated exports and have also enabled our productive sectors to compete better in their domestic markets with imports. This has led to an increase in the demand for resources, driving business investment decisions and encouraging job creation. The increase in employment, favoured by moderate wage growth, has led to a significant recovery in household consumption. Unlike in previous upswings, the moderate growth of prices and costs is helping to ensure that the increase in economic activity is not achieved at the expense of a deterioration in the external balance.
How can the persistent current account surplus, textbook economic theory and the SNB’s own assessment be reconciled? Is the surplus in Switzerland perhaps even the result of a monetary policy designed to deliberately push down the exchange rate in order to boost exports? 1 International debate about certain countries’ current account surpluses and unfair exchange rate policy has intensified in recent years. In this context, Switzerland has been on the US Treasury’s ‘monitoring list’ since 2016, although it is not designated a ‘currency manipulator’ in the associated report as it does not meet all the relevant criteria. However, Switzerland is being specially monitored. We are maintaining a constructive dialogue on this matter with the responsible government agencies in the US. Foreign authorities and international organisations recognise Switzerland’s special position, and appreciate the rationale for the SNB’s monetary policy measures. According to the latest External Sector Report of the International Monetary Fund (IMF) of July 2017, Switzerland’s current account is in line with macroeconomic conditions, and its monetary and fiscal policy is considered appropriate. Yet, international debate about current account surpluses and deficits has at times been heated and not always objective. Some observers have repeatedly denounced Switzerland for its persistent surplus. As criticism has focused on the SNB’s monetary policy, I am naturally keen to give you my analysis of the situation. Before we get into the details, let me outline the crux of my argument.