Small changes in projections can have a huge impact on sustainability. Some of the implicit assumptions underlying current negative judgments seem to me seriously misguided. Let’s look first at the short run. As you know, we have been recently surprised on the upside with the dynamics of growth in the Euro area. Consumer confidence is almost back to pre crisis levels, PMI are at an all time high and GDP growth will almost certainly be above potential, on average, for the year 2011. Those developments take place at a moment where drastic fiscal consolidation programs are implemented in all countries. Those analysts who predicted that fiscal tightening would stifle growth in the Euro area are currently being proven wrong. Positive confidence effects in the private sector are outweighing the negative impact  BIS central bankers’ speeches  3  of public expenditure reduction. In our economic jargon, we seem to be living to day in a “Ricardian” world. What about countries in the periphery? Spanish growth rate swung from –3.7% in 2009 to –0.1% in 2010, despite the fact that a major austerity plan was being implemented. Spanish exports are booming with an increase of 10% within the euro area in 2010 and 19% outside the euro area in 2010. This compares very favourably with performances of other countries both inside and outside the eurozone. Turning to the long run, it is essential, when looking at the inner workings of the euro area to make a distinction between real and nominal evolutions.
In closing, let me re-dedicate on behalf of my colleagues at the MAS, our commitment to our mission:   to secure for Singaporeans a low rate of inflation;    to preserve the purchasing power of our official foreign reserves;    to keep our financial sector safe and sound amidst crisis and change; and    to grow Singapore as a vibrant and trusted financial centre. In this, we look forward to your continued support. Thank you. BIS central bankers’ speeches  3