The Italian economy will continue to grow slowly, slowed down by the maneuver and by the weakness of consumption. This is what Bankitalia predicts in its latest economic bulletin. Economic activity "would be affected by a still weak domestic private demand – reads the document – and by the effects of the measures to rebalance the public finances: GDP would increase by 1% this year and by 1,1% in 2012" .
In 2011, after a first quarter marked by "restrained pace", growth "however strengthened in the second quarter, reaching a pace similar to the average rate of the euro area, drawing support from the recovery of industrial production, which interrupted the stagnation been in place since last fall. The most recent economic indicators, however, "foreshadow some elements of uncertainty about the intensity of the recovery: after the increase in April, industrial activity has weakened".
The main contribution to the dynamics of the product will continue “to come from exports. Given the simultaneous increase in imports, the contribution of foreign trade to GDP growth would be essentially nil this year and slightly positive next year. The recovery in investment would gradually strengthen. The growth in consumption would remain lower than that of the GDP”.
Exports, explains via Nazionale, “are expected to grow at a fairly sustained pace, on average by almost 6% per year in the two-year period 2011-12, also reflecting a good trend in sales within the euro area. At the end of 2012, the overall contraction in exports suffered during the crisis would be recovered almost entirely”.
Now let's see what are the other fundamental issues raised by Bank of Italy in the economic bulletin:
THE GOVERNMENT DOES NOT INCREASE TAXES AND MAKE STRUCTURAL REFORMS
“It is necessary to limit the use of levy increases. The correction of public finance imbalances must be accompanied by incisive and credible structural policies aimed at achieving an increase in the growth potential of our economy”.
ITALY IS AT RISK IF THE BTP/BUND SPREAD DOES NOT FALL
“In the immediate future, the costs of the recent increase in yield spreads on government bonds for our country are limited, but if the current level of spreads persists, this would entail huge burdens for public finances and the risk of repercussions on financing costs of the economy. The process of consolidating public finances is essential to favor the reduction of risk premiums, the fall in long-term interest rates and therefore the growth of economic activity. The maneuver defined by the government moves in this direction”.
THE MANEUVER HAS BEEN STRENGTHENED AND IMPROVED IN PARLIAMENT
“In recent days, during the parliamentary discussion, amendments to the decree law were introduced which strengthen the maneuver and further improve the balances with respect to the previously defined objectives. Above all, an automatic resource recovery mechanism contributes which would operate if the delegation were not exercised by 30 September 2013 with measures that reduce the balance by 4 and 20 billion in 2013 and 2014 respectively”.
THE TOP 5 ITALIAN BANKS HAVE STRENGTHENED, CORE TIER 1 AT 8,6%
“By largely benefiting from the strengthening of capital, the capital ratios of the major groups have grown significantly. The Core tier 1 ratio, relating to the best quality assets, rose from 7,4% at the end of 2010 to 7,8% in March. It can be estimated that it has further grown to around 8,6%, thanks to the recapitalization operations that were subsequently closed”.
EMPLOYMENT DOES NOT START AGAIN, COMPANIES OFFER PRECARIOUS CONTRACTS
"In the first five months of the year, employment stagnated, settling in the April-May two-month period on the average values of the end of 2010. There are no signs of a significant recovery in employment in the summer months" and, "in an economic framework still uncertain, companies continue to favor hiring with flexible and part-time contracts”.
INFLATION WILL RISE TO 2,7% THIS YEAR, 1,9% NEXT
“Consumer price inflation would temporarily rise to 2,7% on average for the current year (1,6% in 2010, ed), driven by the sharp rises in raw materials, but it would return below 2% (1,9. 2012%) in XNUMX” thanks to the “reduced effect of raw material price increases”.
The full text of the economic bulletin published by Bank of Italy.
