The prospects of the Italian economy are "improving" and the long-awaited "turning point" seems to have arrived, although the conditions of the labor market remain "difficult". The Bank of Italy writes it in its latest economic bulletin. According to Via Nazionale, GDP will mark +0,7% in 2014 and +1% in 2015.
GDP growth will be driven "by the dynamics of international trade and by the recovery, albeit moderate, of investments". It also envisages “a stronger contribution from domestic demand, also thanks to lower interest rates than assumed, and a less favorable contribution from foreign trade, mainly attributable to exchange rate appreciation”.
As for price trends, on the other hand, "the forecasts for consumer inflation for the two-year period have been revised downwards": the Ipca index (the one used in the EU), from 1,3% in 2013, will drop further to 1,1% this year to then go back up to 1,4% in 2015. Via Nazionale underlines this trend, “both the decline in the energy component and the limited dynamics of domestic prices which discount the large capacity unused productive capacity of firms". The danger of deflation, however, does not appear to exist.
On the other hand, downside risks remain linked above all to the "conditions of access to credit - continues the report - if they remain restrictive for longer than envisaged or if the payments of commercial debts of the public administrations register deferments, the recovery of investment would be delayed”.
In particular, “business credit has not yet benefited from the improvement in conditions on the financial markets – continues Bankitalia -. Credit decreased in Italy, in the three months ending in November, by more than 8% on an annual basis and continues to represent a brake on the recovery. Loans are affected by low investment demand and, on the supply side, by high credit risk and the pressure of the recession on banks' balance sheets”.
Finally, as regards the labor market, the unemployment rate will jump from 12,2% in 2013 to 12,8% this year, before rising to 12,9% in 2015. The strengthening of economic activity , underlines Bankitalia, will be transmitted "gradually and with delay to the labor market". Employment, which fell by about 2% in 2013, will continue "to decrease slightly in the coming quarters and then increase by about half a percentage point in 2015".
