The International Monetary Fund again cuts its estimates on the performance of the global economy, this time due to Brexit. The unexpected outcome of the British referendum led the Washington institution to reduce its forecasts for this year and next by 0,1%, bringing them respectively to +3,1 and +3,4%.
It seems like an insignificant filing, but it represents a trend reversal, because up until the consultation held on June 23rd, the IMF expected to revise the estimates upwards.
As mentioned a few days ago, according to the Fund, Italy's growth is now reduced to 0,9% this year and 1% next. As regards the Eurozone, in the update of the World economic outlook, the entity led by Christine Lagarde expects growth of 1,6% in 2016 and 1,4% in 2017, against the respective +1,5, 1,6% and +1,7% estimated in April. The United Kingdom will pay the heaviest price for global uncertainty, for which the IMF is now forecasting a +0,2% for this year (-1% compared to last April's estimates) and a + 0,9% for the neighbor (-XNUMX%).
“The worsening of the estimates – writes the Fund – reflects the macroeconomic consequence of a significant increase in uncertainties, including at the political level”. Uncertainties that will weigh on confidence and investment, as well as the general sentiment of financial markets.
Returning to Italy, the Fund explains the reasons for the cut: "The accumulation of tax debts is alarming, the structural problems must be tackled urgently" Among the causes, above all, stand out "the weak system of VAT returns" and the "duplication or subdivision of audits and tax investigations” attributed to different subjects. The revenues, underlines the IMF within the report, “are high but the results of the collection of the main taxes present a fluctuating trend; the efficiency of VAT collection is low”. According to Washington economists, "great reliance is placed on withholding taxes on labor income" and even if "the VAT gap has narrowed in recent years, with a percentage of 30%, it is still among the highest in Europe".
The result of all this is there for all to see. Italian VAT efficiency is "among the lowest in Europe and tax management is weak".
The report also speaks of the European banking system, in which "vulnerabilities persist", especially as regards Italy and Portugal. Consequently, Washington calls for action "quickly and decisively to ensure resilience to the financial system against the protracted period of uncertainty and turbulence that could arise".
