The predictions about GDP 2017 of Italy improve from the +1,4% estimated in September to +1,6%, the highest rate in the last 7 years, surpassed only three times since the start of the Eurozone. Furthermore, the favorable economic conditions will allow growth to settle at + 1,5% in 2018. The Prometeia analysis center writes it in its December Forecast Report.
According to the analysis, foreign demand and tax incentives are favoring the start of an expansion cycle of investments in equipment and technology in Italy too (+12% in 2017-18).
In discontinuity with the recent past, fiscal policy will once again be moderately restrictive. In 2018, the high public debt will reduce, but only gradually (130,5% from 131,8% in 2017), continuing to represent a risk factor for the economy.
The change in intensity first, and then in direction, of the favorable winds will begin to be felt from 2019 when, in the face of still expansive monetary policies, the less benevolent international context will be accompanied by the change in stance of the moderately restrictive Italian budgetary policy. The euro and strengthening prices will throw sand into the gears of recovery and, starting from 2020, even monetary policies will gradually reduce their support for growth. Prometeia therefore estimates that the growth rate of the Italian economy will slow down to around 1%, more in line with the country's potential growth.
Therefore, for Prometeia there is a need – in a global context that will remain favorable for next year – to dedicate resources to an investment cycle that, by enlarging the production capacity, it will increase its productivity, and therefore the Italian growth potential.
As for monetary policies, according to Prometeia they will move cautiously so as not to interrupt the recovery abruptly: Prometeia expects that the ECB will not raise rates until the end of 2019.
Meanwhile, in the United States Trump's tax reform, as a whole, will determine at most a boost to GDP of one tenth of a percentage point in 2018 and two tenths in 2019 and 2020.
A Globally, Prometeia forecasts a new acceleration for the world economy in 2017 (+3,5%), with average annual growth in global trade close to 5% thanks above all to the contribution of China. Strong expansion continued in 2018 (GDP +3,5%, trade +4,3%), despite a lower contribution from Beijing, the US fiscal uncertainty and geopolitical risks.
