The slowdown continuesEuropean economy. To prove it, the Italian data: the favorable phase, in which our country showed a positive growth differential compared to Germany and France, ended, with GDP which fell by 0,4% in the second quarter and the rather disappointing initial information on trends in the summer months.
According to the last one conjuncture published by Ref Ricerche, the characteristics appear to be the same everywhere: in all the major countries domestic demand is decelerating, especially in the components of consumer goods and investment in construction. This decline is also translating into a drop in imports and, consequently, into a contraction in world trade. European exports have stopped growing, following the weakness of global demand.
Italian economy in slowdown
Given the trends of the first part of the year, the “acquired” growth in Italy in 2023 is 0,7%. "In the light of the phase of relative weakness that various indicators highlight for the second half of the year", Ref predicts, "it is probable that the average increase for the current year will be based on this value". The current phase could also continue next year, when the GDP could undergo an increase of less than 1%.
“The next rounds of forecasts, including the long-awaited Nadef at the end of the month, will in all probability revise growth estimates down for next year compared to the scenarios formulated before the summer”, reads the institute's note.
From the point of view ofthe productive sectors, the contraction of GDP in the second quarter derives from a fairly widespread weakening, which was probably superimposed by some accidental factors, such as the floods in Emilia Romagna. "It is therefore possible that part of the fall in construction will be partially recovered in the third quarter", reads the study, according to which, even net of these effects, things did not go well: the industry added value strictly speaking, in fact, it recorded the fourth consecutive negative change. THE services instead they achieved a slight decrease, which in any case follows a significant increase in the previous quarter. In general, therefore, the gap between industrial activity and services in recent quarters has been quite marked.
Forecasts for the third quarter
The scenario does not improve much by shifting attention to European data for the summer period. For now, the information available is mainly limited to the results of surveys on the climate of trust. These, in the months of July and August, showed very disappointing results. Furthermore, if initially the worsening of the economic situation mainly concerned manufacturing companies, in the most recent data the weakening is also starting to affect service activities. The first information shows a worsening of the economic situation in the euro area, with a particularly negative trend in Germany which could show a heavy recession in the final part of the year.
From the Markit surveys we observe a worsening demand trends in the euro area, and a reduction in the level of backlogs in industry, while other industries herald a worsening of business expectations on employment.
"An aspect to look at with some concern - underlines Ref - is represented by the expectations of industrial companies on theemployment trend. Until the second quarter, this variable had not followed the deterioration in production prospects, confirming the variation between growth data and those relating to labor demand. In recent months, however, industrial companies seem to be looking more cautiously at employment prospects, anticipating a phase of slowdown in the demand for labour”.
Trust indicators market services lastly, they showed a relative stability in expectations on demand while they decreased slightly
expectations on the trend of employment. One aspect to highlight in relation to the August surveys concerns price expectations which, unlike the industry, have shown an upward revision.
Consumption in the summer, tourism penalized by the increase in prices
For the month of August, the Ref conjuncture highlights a particularly interesting aspect, relating to consumer behaviours in the summertime. On this aspect, household surveys showed an improvement compared to the lows reached at the beginning of the year, mainly attributable to the slowdown in inflation”. However, the picture for consumption appears less positive if one looks at the results of the surveys of retail trade companies, which showed a reduction in expectations on orders and a progressive reduction in expectations on prices.
On the subject of consumption, one of the aspects that characterized the months of July and August was also the disappointing information relating to the tourist season, after the promising results that emerged until last spring. “In part, these results would also have depended on an increase in the flow of Italians abroad, which would have reduced the effects of the recovery in the arrivals of foreign tourists in the summer period. In fact, it would not be a question of a slowdown in demand, but rather, in technical terms, of an increase in the elasticity of imports to the growth of demand", analyzes Ref, according to whom "one possible explanation is that there has been a loss of competitiveness of the national tourism sector following the significant price increases the last two years.
