The Bank of Italy cuts its estimates on Italy's GDP for 2015, now expected to grow by only 0,4%, against the +1,3% expected in July. The increase expected for 2016 is more sustained, equal to +1,2%, which would in any case keep our country "still more than 7 percentage points below the 2007 level". In its latest economic bulletin, Palazzo Koch also points out that "uncertainty around these values remains high" and that "the intensity of the recovery in investment spending will be crucial: a rapid improvement in demand prospects and financial conditions could increase it , despite the high degree of spare capacity. A more favorable trend in activity would be expected if the price of oil remained at the values of the last few days”.
CONSUMPTION IS GROWING, BUT INVESTMENTS DO NOT RELEASE
According to Bank of Italy, "in recent quarters, consumption has resumed growth to a limited extent, in line with the trend in disposable income supported by the measures adopted by the Government", but "their contribution to economic growth has been offset by the decline in investments, held back by the wide margins of unused capacity, by the high uncertainty on the prospects of demand and by the difficulties of the building industry”.
IMPROVE CREDIT OFFER, BUT NOT FOR SMALL BUSINESSES
As for the conditions for providing credit to businesses, “according to the most recent surveys, they have improved – writes the Bank of Italy –, but remain more stringent for smaller companies. Average interest rates on new loans fell gradually, although remaining higher than those in the euro area (by around 30 basis points for businesses and households). Demand factors linked to the weakness of investments, together with the perception of a high credit risk for some categories of companies, are still holding back the dynamics of loans”.
EMPLOYEES INCREASING AFTER TAX WEDGE CUT
On the employment side, however, Palazzo Koch underlines that the figure should expand “overall by just under 1% in the two-year period 2015-16. About a third of the increase would derive from the measures to reduce the tax wedge contained in the stability law: in particular, the cut in Irap and the de-contribution for workers hired in 2015 with permanent contracts”.
DEFLATION IN 2015: PRICES -0,2%
Lastly, as regards price trends, the Bank of Italy forecasts that 2015 in Italy will end in deflation, albeit by a marginal percentage (-0,2%), "largely affected by the sharp drop in of oil. Net of the energy and food components, the price increase would still be low, equal to 0,6%”. Inflation, adds Via Nazionale, should then remain below 1% also in 2016 (at 0,7%).
