Green light ofParliamentary Budget Office to the estimates contained in the Nadef. The PBO Council has validated the macroeconomic forecasts trends of the Update Note to the 2023 Economic and Financial Document presented by the government on 27 September.
“The trend picture for the Italian economy is in an acceptable range, both in the two-year period 2023-24 and in the following one (which is not subject to validation)", we read in the validation letter sent to the Ministry of Economy and Finance last 21 September and published today on the Upb website.
The body that carries out a supervisory function on public finance also communicates that it will also evaluate the programmatic macroeconomic framework of Nadef itself, a framework which incorporates the effects of the next budget maneuver. “The outcome will be communicated during the usual parliamentary hearing at the Budget Commissions”, underlines the PBO.
Nadef: what the Parliamentary Budget Office says
According to the PBO, the Government's estimate on growth of the Italian economy for 2023, equal to +0,8%, two tenths less than what was forecast in the Def, "it is substantially aligned with the median of the forecasts of the panel Upb (composed of Cer, Prometeia, Ref-Ricerche and Oxford Economics, as well as the Office itself) and coincides with the forecast of the Upb". After the slowdown recorded in the second quarter, Nadef expects a recovery in the second half of 2023. An evolution "quantitatively shared" by the UPP which, however, envisages a dslightly lower product dynamics. The reason? “The most recent economic data indicate that production levels remain unsatisfactory in manufacturing and activity in construction is still weak; in services, activity, less lively than last year, would have been affected by price increases", say the experts from the Parliamentary Budget Office
As it regards instead 2024, Nadef expects growth of 1%, half a point less than what was estimated in the Def, an estimate "just higher than the PBO forecast and substantially intermediate between the median value and the upper limit of the panel of the Parliamentary Budget Office", which however warns: "the macroeconomic framework for 2024 is however marked by high uncertainty, largely attributable to the instability of the global economic scenario and the numerous risks.
Upb: uncertain estimates, many downside risks
What causes so much uncertainty? Overall, the Parliamentary Budget Office notes the prevalence of downside risks. First of all, the critical issues connected to Pnrr and the "integral, timely and efficient" use of the funds arriving from Brussels. Then follow the risks associated with war in Ukraine “which remains a significant unknown”, as do the growth prospects of large exporting countries such as Germany and China.
“It should also be underlined a risk linked to persistence of inflation: the forecasts for the next few years are based on expectations of a clear decline in inflation in 2024, which however is not certain as it also depends on exogenous factors, such as geo-political or climatic ones", explains the body. Finally, global financial structures remain tense and volatile with potential repercussions on international macroeconomic balances. “Ultimately, the international framework appears unstable and fragile, so the prospects could change in a short period of time”, concludes the PBO.
