The credit crunch is easing but the improvement in credit supply conditions is "very slow". This was supported by the Bank of Italy in its latest economic bulletin, published today, specifying that "in the most recent surveys firms report a slight easing of the restriction in the conditions for accessing credit", but that "a reversal has not yet occurred trend in the dynamics of business loans”. In Italy, adds Via Nazionale, the cost of credit for companies "remains higher than that of the euro area by about 80 basis points".
SLOW RECOVERY, DRIVING THE EXPORT
In Italy "there are signs of a slow extension of the recovery", but "the economic framework remains fragile", writes Palazzo Koch, underlining that there are "the first signs of improvement in domestic demand", but "due to the progressive reabsorption of unemployment , especially of the youth component, most affected by the crisis, a lasting growth and increased capacity for innovation of companies is necessary. The trend in industrial production and business surveys indicate that economic activity continued to grow moderately in the first few months of the year. The recovery remains differentiated between categories of companies and on the national territory, but it should spread: according to surveys, the improvement in the prospects of larger industrial companies and those oriented towards foreign markets is accompanied by the first positive signs also for services. The situation in the southern regions remains less favourable. The most recent economic indicators show that the good performance of exports continued in the first quarter. The prospects remain favorable overall: according to companies, orders from abroad are growing”.
EMPLOYMENT STILL DOWN, WILL START AGAIN ONLY AT THE END OF THE YEAR
As for the labor market, according to Bank of Italy, “despite some improvements, conditions remain difficult. Were the recovery to continue at the moderate pace currently outlined by most forecasters, the number of employed people would return to growth only gradually, not before the end of the year. The decline in employment eased slightly in the second half of 2013 and the hours worked per employee increased in industry, but the unemployment rate reached 13% in February”.
INVESTMENTS START AGAIN, BUT CONSUMPTION STILL WEAK
Lastly, on the front of “investment spending, it has gradually returned to increase – writes via Nazionale – the judgments of companies on the conditions for investing have returned to line with those prior to the sovereign debt crisis. There are also signs of stabilization in household purchases, with a modest recovery in car registrations and progress in the climate of confidence. However, consumer spending remains far below (almost 8%) the 2007 level and is still affected by employment prospects”.
