The prospects for the Italian economy are increasingly dark: 2012 will bring a severe recession, with GDP in free fall of 1,5%, while 2013 will be zero growth. This is the scenario we will have to face if the Btp-Bund spread remains stable at around 500 points and if credit tensions remain high. The Bank of Italy foresees it in its latest economic bulletin. With the dissemination of these estimates, Piazza Affari practically canceled all the gains of the day, while remaining in positive territory.
But that's not enough. “There is the risk that a worsening of expectations – reads the report -, which determines a further tightening of the conditions of the sovereign debt and credit markets, could lead to a more accentuated decline”.
In a more favorable scenario "in which the public finance consolidation policies adopted by the government and the responses to the crisis agreed upon at European level would at least partially restore investor confidence - underlines Bankitalia -, reducing financing costs for all economic players, the economy Italy could recover more quickly".
With a return of the Btp-Bund spread to last summer's levels (about 200 points), in 2012 the GDP would drop by 1,2%, but there would be a "stabilization in the second half of the year and a more rapid return to growth in 2013". At best, GDP would grow by 0,8%.
IN 2011 MANEUVERS OF 80 BILLION, PRIMARY SURPLUS OF 2013 AT 5%
Le three maneuvers correctives approved between July and December have structural effects of about 80 billion and “they should ensure in 2013 a primary surplus in the order of 5% of GDP“. According to via Nazionale, the only one December intervention "reduces debt by over 20 billion in each year of the three-year period 2012-14" and "finds the resources (about 15 billion in 2013) necessary to finance a set of interventions in favor of growth and to reduce that part of the deficit reduction which had been postponed to the implementation of the tax and welfare reform”.
A RELAUNCH IS NEEDED: STRUCTURAL REFORMS IMMEDIATELY
As for the measures being defined, the Central Institute underlines that "if well designed and promptly implemented, stimulating the potential growth capacity of the product, can have a positive influence the expectations of the markets and the spending decisions of households and businesses, reverberating favorably not only in the long term, but also on results this year and next".
But "ambitious policies to restore confidence and ensure the normalization of market conditions they are also indispensable at the European level. It is essential to implement all the elements of the recently approved new rules of economic governance of the European Union. At the same time it is important that the strengthening of European instruments for financial stability, such as the EFSF and the ESM, be made operational quickly, increasing their effectiveness and promptly exploiting their potential”.
BANKS: STRONG RISK OF INCREASE IN NON-PERFORMING LOANS
There is a strong risk of an increase in non-performing loans by Italian banks. "The evolution of credit quality presents significant risks of deterioration" reads the Bulletin, which adds that the exposure of banks towards non-performing debtors for the first time began to increase again in October and November reaching levels "significantly higher" than the same period of 2010.
WORK: EMPLOYMENT RECOVERY HAS STOPPED, PESSIMISTIC COMPANIES
“Il
employment recovery started in the last quarter of 2010 – continues the bulletin – stopped in the last months of last year: in October and November there would have been a drop in employment and a recovery in the unemployment rate, which reached 30,1% among the youngest. Even if recourse to layoffs continues to decrease, the expectations of companies on their employment levels are worsening”.
