The forecast scenario released by the ABI Research Office, built as usual together with the Research Offices of the main banks operating in Italy, on the one hand, confirms that our economy has come out of the recession, on the other, in any case draws a pace of slow growth, consistent with the international cyclical framework: for 2016 e for 2017 a positive variation of the Italian GDP of 9 tenths of a point is expected, 2 tenths higher than that of 2015; for 2018, a growth of 1,2% is estimated.
Growth will be entirely driven by domestic demand, with the foreign component providing a marginally negative contribution. Good dynamics are expected for household consumption (growing at an average rate of 1,2% over the three-year forecast) and for investments (+1,8% the average figure over the three-year period). This will allow for employment growth and a 1,2 percentage point reduction in the unemployment rate. However, price growth will still remain very limited, exceeding the level of 1% only in 2018.
In the forecast scenario of the ABI's Research Office, confirmation of the strong action of the ECB to safeguard financial and currency stability is assumed. The interest rate scenario will therefore see a ccontinuation of the low short-term interest rate policy: the 3-month Euribor rate should be negative over the entire forecast horizon, reaching an average of -0,4% in 2018. Given the context of the financial markets, the spread between BTPs and Bunds should be around this year's average to 1,4 percentage points, 2 tenths of a point more than the 2015 figure, remaining stable at this level in 2017 and then going back down to 8 tenths of a point on average in 2018. These dynamics should lead to a further reduction in the differential between bank lending and funding rates. in the first two-year forecast.
The banking business scenario is influenced by the launch and consolidation of the process of reducing the risk of assets: ahead of our most recent forecasts, net non-performing loans should start the recovery process this year, decreasing by 2,2% compared to 2015; in the following two years, the reduction of the stock should accelerate and this also in a scenario net of any extraordinary transactions for the disposal of non-performing loans capable of speeding up their exit from bank balance sheets. In absolute terms, between 2015 and 2018, a reduction in the amount of net non-performing loans is expected by over 16 billion euro.
This reduction combined with a recovery in credit demand would translate into a contraction in the non-performing loans/lending ratio, which should drop by around 1 percentage point over the entire forecast period, reaching 2018% in 3,6, the lowest value since the middle of 2013. The risk reduction is mainly driven by a strong reduction in incoming flows of non-performing loans which is associated with a significant growth in outflows from non-performing loans and a contribution deriving also from the predictable positive effects associated with the recent legislative innovations aimed at speeding up credit recovery procedures as well as those linked to the introduction of new tools to facilitate the disposal of stocks of non-performing loans.
The current financial tensions, even if expected to subside in a short time, affect the recovery of banking profitability by determining, compared to previous forecasts, more contained revenue flows and an increasing revision of provisions on financial assets and loans. The profitability profile remains oriented towards growth, however compared to the forecasts of last July, 3,8 billion euros of lower profits are expected for the three-year period 2016-2018. Overall, the profitability of the sector appears to be recovering but still lower than the cost of capital.
