Such a performance – growth above 2% for two consecutive years – has not been observed since 1999-2000. In 2006 alone, over two million jobs were created in the euro area, which brings to 13 million the total number of jobs created since the introduction of the single currency; this figure is slightly higher than that for the United States over the same period. After a catch-up phase in which growth was significantly above its long-term trend, the euro area’s GDP is currently increasing at a rate close to the economy’s potential. This growth is balanced since all of the components of demand are contributing to it in a harmonious fashion. In the first phases of recovery, the contribution of external demand was decisive. But productive investment and, almost everywhere, household consumption are now supporting the business cycle. This has enabled and led, in most countries, to a welcome consolidation of public finances, with no adverse impact on the economy. Concerning the future, the outlook for Europe is dominated by three questions, varied in nature. The first naturally concerns the international environment. Forecasts for world growth remain good. At this juncture, the US economy appears to be absorbing the economic and financial impact of the slowdown in the property market. Emerging market economies displayed encouraging resilience in the face of the two episodes of financial volatility that affected international equity markets in May 2006 and March 2007.
Christian Noyer: Monetary policy, the French economy and its outlook Introductory letter by Mr Christian Noyer, Governor of the Bank of France, to the Bank of France’s Annual Report 2006, submitted to the President of the French Republic, the President of the Senate, and the President of the National Assembly, 1 August 2007. *  *  *  I have the honour of submitting to you, as required by law, the report on the operations of the Banque de France, monetary policy and its outlook. The year 2006 was marked by robust and more balanced growth in global economic activity across virtually all regions. Thanks to this favourable international environment, the French economy saw a return to dynamic growth conducive to employment and the reduction of government deficits. This cyclical upturn should not, however, mask the structural difficulties facing the French economy, which is performing less well in all these areas than its main trading partners and which, moreover, is witnessing a further widening of its external deficit. Against this backdrop, I should like to outline a number of analyses of the growth environment, monetary policy, the state of the French economy and the main challenges that it needs to rise to in order to take advantage of globalisation and make structural improvements to growth and employment. In 2006, the European economy entered a period of sustained and balanced growth Growth in the euro area is sustained: after 2.9% in 2006, it could stand at 2.6% in 2007.