In the first few months of the year, the recovery of the international cycle and the recovery of world trade exceeded expectations. The strengthening of the industrial cycle, more lively in Asia, extended to most economies, including those of the euro area. In Italy, too, industry is recovering, with relatively lively growth for the third consecutive year. It is significant that, after many years, industrial production has begun to grow in Italy at a rate similar to that of our European partners.
There are three drivers of the recovery of Italian industry on the demand side: a robust cycle of the car industry, the recovery of exports and the restart of investment in machinery thanks to tax incentives. The context for producers of non-durable consumer goods is less favourable, and above all for the sectors belonging to the construction chain, which currently represent the real ballast of the Italian recovery.
Elements of uncertainty about the prospects derive from the changes in the international currency scenarios. Up to now, the dollar's decline has taken place against a wide range of currencies, but reactions from some countries cannot be ruled out, especially in Asia. A depreciation of the currencies of emerging countries would amplify the strengthening of the euro in effective exchange rate terms. Economic indicators suggest that the short-term prospects are oriented in a favorable direction. The growth of the industry should continue in the second half of the year, progressively affecting a wider number of sectors.
However, the recovery in progress is still too tied to the inherently uncertain fate of international demand. The greatest risks derive from a scenario of further appreciation of the euro, and can be countered on condition that the ECB maintains an expansive policy for the whole of 2018.
