Competitiveness indicators (based on GDP deflators)

Publication schedule


The purpose of harmonised competitiveness indicators (HCIs), which are based on consumer price indices, is to provide a consistent and comparable measure of euro area countries’ price competitiveness that is also consistent with the real effective exchange rate (EER) of the euro. The HCIs are constructed using the same methodology and data sources that are used for the euro EER. While the HCI of a specific country takes into account both intra and extra-euro area trade, however, the euro EER is based on extra-euro area trade only. Therefore, the HCIs and euro EER reflect different phenomena and are not directly comparable. The HCIs complement other competitiveness indicators published by some NCBs which may follow different methodologies and, in some cases, use different price measures in order to account for the specific circumstances in the respective country.



Definitions and terms:

Exchange rate indices, Eurosystem.


Collected quarterly

The HCIs are conceptually equivalent to the real EER of a currency. They are calculated on the basis of weighted averages of bilateral exchange rates vis-à-vis the currencies of the trading partners of each euro area country and are deflated by appropriate cost or price indices. The methodology is based on the following elements:

Trade basis:

The weights are based on bilateral data on trade in manufactured goods, as defined in Sections 5 to 8 of the Standard International Trade Classification (i.e. excluding agricultural, raw material and energy products) for the periods 1995–1997, 1998-2000, 2001-2003, 2004-2006 and 2007-2009.

Weighting method:

The weights incorporate information on both exports and imports. Import weights are the simple shares of each partner country in the total imports. Exports are double-weighted in order to account for “third-market effects”, i.e. to capture the competition faced in foreign markets from both domestic producers and exporters from third countries. The final overall weights of each partner country are obtained as the weighted average of the export and import weights.

Five sets of weights are currently available, based on trade data for the periods 1995-1997, 1998-2000, 2001-2003, 2004-2006 and 2007-2009. The final HCIs result from chain linking, at the beginning of each period, the indices based on the weights for two consecutive periods. The weights are updated every three years in order to reflect recent developments in the pattern of international trade.


Trading partners:

The HCIs based on the GDP deflators and on unit labour costs are compiled vis-à-vis the other 16 euro area countries and the group of 21 trading partners, which comprises the 11 non-euro area EU Member States, Australia, Canada, China, Hong Kong, Japan, Norway, Singapore, South Korea, Switzerland and the United States. The HCIs based on consumer prices are additionally calculated vis-à-vis the other 16 euro area countries and the group of 41 trading partners, which comprises the group of 21 plus Algeria, Argentina, Brazil, Chile, Croatia, Iceland, India, Indonesia, Israel, Malaysia, Mexico, Morocco, New Zealand, the Philippines, Russia, South Africa, Taiwan, Thailand, Turkey and Venezuela.


The HCIs are deflated with the following variables:

– Consumer price indices: the all-items Harmonised Index of Consumer Prices as published by Eurostat is used for European countries, while all-item national consumer price indices are used for all other trading partners;

– GDP deflators: for European countries, they are derived from their quarterly national accounts as published by Eurostat; for the other trading partners, they are derived from their national accounts as published by the BIS, the OECD and the IMF;

– Unit labour costs for the total economy: unit labour costs are compiled as the ratio of the compensation per employee and labour productivity, with labour productivity measured as GDP at constant prices divided by the total number of persons employed; for European countries, the available data are derived from their quarterly national accounts as published by Eurostat; for the other trading partners, these data are derived from their national accounts as published by the BIS, the OECD and the IMF.

Seasonally adjusted data are used in order to eliminate the effect of seasonal patterns and temporal disaggregation is performed based on annual series if quarterly data are not available.

Non-deflated HCIs are available on the ECB website, in the Statistical Data Warehouse.


Indicators based on consumer price indices are the most widely used indicators of price competitiveness since they offer the best data quality and comparability across countries, are available on a timely basis (also for emerging market economies) and are subject to only minor revision. As all Harmonised Competitiveness Indicators they do, however, have a number of drawbacks from a conceptual point of view (e.g. the indicators based on consumer price indices exclude some tradable goods, such as capital goods; they are affected by indirect taxes and subsidies; and they are only indirectly related to production costs.

Indicators based on unit labour costs usually show some volatility and are subject to more significant revisions, owing to the specificities of the compilation of statistics on wages and employment.

The indicators based on GDP deflators can be affected by the volatility of quarterly GDP series, in particular, for smaller economies. Whole year results may be more reliable indicators of underlying trends. The comparability of these indicators can also be affected by distortions owing to taxes and subsidies.

Overall, comparability across countries can be affected by the inclusion of prices or costs of goods and services that are not internationally tradable, and thus might only indirectly affect the price competitiveness of the export sector.

Other competitiveness indicators:

In addition to several Eurosystem NCBs, the European Commission and other international organisations, such as the BIS, the OECD and the IMF, publish similar competitiveness indicators. Any discrepancies between these and the HCIs can be due to methodological differences, the use of different data sources, different weights and/or a different coverage in terms of trading partners.

Reporting institutions:

Euro area NCBs and the ECB (Eurosystem).

Standards and codes:

ISO country and currency codes, SITC, rev. 3.


Exchange rate indices, Eurosystem.