Bank of Italy has revised its 2013 GDP estimates downwards. According to the latest forecasts, next year the gross domestic product of our country will drop by one percentage point (the previous indication was -0,2%), "due to the worsening of the international context - reads the latest economic bulletin of via Nazionale - and the continuation of the weakness of the activity in the most recent months". However, "the scenario foreshadows a return to growth in the second half of the year, albeit at a modest pace and with wide margins of uncertainty". The GDP trend should return "slightly positive in 2014", with a growth of 0,7%.
As for the 2012, GDP slipped by 2,1%. At the moment, according to Bankitalia, "there are still no signs of a cyclical reversal in the initial months of 2013" and "economic activity remains weak even in the first quarter of 2013".
For all these reasons, according to Palazzo Koch, Italy must “consolidate the rebalancing of public finances and intensify the reform effort aimed at relaunching competitiveness and raising the economy's growth potential. The indispensable requisites for a return to growth are the continuous improvement of the credit supply, favorable conditions on the government bond markets and a recovery of confidence which will allow for a restart of investments. It remains essential to ensure that the progress achieved so far in these areas thanks to the joint action of all economic policies, national and European, are lasting”.
UNEMPLOYMENT WILL INCREASE FURTHER: 12% IN 2014
“The gradual recovery of productive activity will allow for a stabilization of the labor market in the coming year, but not yet for a trend reversal, also in consideration of the usual delays in the transmission of the economic cycle to the demand for labour. Employment is estimated to shrink this year (by almost 1% on average) and stagnate the next. The unemployment rate will increase, also reflecting the increase in job seekers, and will reach 12% in 2014”.
CONSUMPTION IN FREE FALL, NO SIGNAL OF RECOVERY
Household consumption is still declining, affected by the drop in income and pessimistic about the future, and "even in the coming months" consumer behavior should remain "depressed", because "there are no signs of their recovery". In 2012 consumption fell by 4,1% and this year the fall will be 1,9%.
INFLATION, THE DECLINE WILL CONTINUE IN 2013
“The gradual decline in consumer price inflation in recent months (to 2,3% in December) largely reflects the easing of pressure from oil prices and the fading impact of the indirect tax measures launched in the autumn of 2011. Weak demand and lower cost-side pressures should continue to moderate price growth in 2013. Inflation measured on the basis of the harmonized index of consumer prices (Hpca), should return below 2% in two-year period 2013-14”, with a growth of 1,7% this year and 1,8% next year.
CREDIT STILL DIFFICULT, BAD INCREASE
The credit trend “is affected by the weakness, albeit attenuating, of the demand from businesses and households, linked to the unfavorable economic situation and the worsening of the real estate market, and by still tense supply conditions. Credit conditions benefited, during the year, from the gradual removal of the liquidity constraints weighing on Italian banks, also thanks to the policies implemented by the Eurosystem. However, the supply of loans is still held back by the high risk perceived by intermediaries, in relation to the effects of the recession on corporate balance sheets. Non-performing loans have increased significantly”.
