Where does theItalian economy after a year of Meloni government? “Floating is always better than sinking” observes the political scientist with ironic realism Roberto D'Alimonte. There is some truth in his words, but if you don't govern and if you just float you won't get far. And in fact, like the prestigious "Economy hands” by Fabrizio Galimberti and Luca Paolazzi have repeatedly reported on FIRSTonline, Italian growth is declining and inflation is falling but not enough and the task of our debt it becomes more cumbersome and reminds us that not only the rating agencies but above all the financial markets are scrutinizing us closely.
In Italy there is no recession but inflation is not falling enough and public debt is looming
The Prime Minister can well say that for now the owls have been defeated and that Europe fears her recession it hit Germany, Sweden, Austria, Poland and Hungary but not Italy and it can also be said that employment rose to record levels and the unemployment rate (7,3%) fell to minimums for 14 years. All true but the 2023 GDP growth (+0,7%), if it has not returned to the levels of the telephone prefixes, is not even remotely related to the GDP of the golden two years of the Draghi Government which between 2021 and 2022 put achieved a dazzling growth of 12% which took us back to the years of the Italian economic miracle between the 50s and 60s. A growth of 0,7%, D'Alimonte would perhaps say, is better than zero growth, but it does not give us any illusions that a change of pace can be imagined next year and partly in 2025. Obviously the weakness of Italian growth is part of the general slowdown and does not depend only on the economic policy of the Government which, in the budget maneuver, did not do any great foolish things and which - net of the two conflicts - has to deal with both problems and they trouble the whole world (from high inflation to the tightening of monetary policy and high interest rates, without forgetting the weakening of the international industrial cycle) as well as domestic critical issues. The weakness of domestic consumption, weighed down by inflation which is even higher than the European average (6,1% versus 5,5%), the slowdown in investments (-1,7% in the second quarter of 2023) which are unable to take advantage of the once-in-a-lifetime opportunity PNRR, and the freeze in industrial production, down for the fourth consecutive quarter and still below the pre-Covid level, make us reflect and explain better than many reasons why trust in Italy and in Italy has been declining for some time. “What is the Government waiting for – the assembly of the powerful association of industrialists of Vicenza asked with concern last week – to launch the Industry 5.0 plan?” But we could add: what is Meloni waiting for to sign the Month?
But above all there is one aspect of the current phase of the economy of which the Government does not seem to be fully aware, at least according to what emerges from the budget maneuver. And it is the fact that the slowdown of the economy and the insufficient reduction in inflation, when combined with high interest rates, make the management of the Italian public debt even more problematic and more expensive. If in three years' time the crucial debt/GDP ratio is only insufficiently capable of rising from the current 142,3% to 139,6% in 2025, it is not surprising that the markets' confidence in Italy is not enthusiastic, that the yields of BTPs rise, that the spread widens, that the yields of Credit Default Swaps increase and that Italy is now considered riskier than Greece.
Meloni worries about Salvini but perhaps he should worry about more than 3 trillion in debt
Meloni thinks every day about how to repel the siege from the right of that populist friend of Marine Le Pen, Matteo Salvini, but above all it shouldn't be a public debt of 3 thousand billion and an interest expense of 100 billion a year make her lose sleep? Parliamentary numbers in hand, D'Alimonte reminds us that in this legislature there is no possible alternative to the Meloni Government, barring accidents on the unfortunate differentiated autonomy and barring twists resulting from the European elections, and this is indisputable in a photograph statics of the Italian political situation. But what would happen if arating agency downgraded Italy and the funds and large international banks decided not to buy ours anymore BTP? Fortunately for now there is no sign of catastrophe looming, but when the Minister of Economy, Giancarlo Giorgetti, who is a prudent man, warns that in 2024 the BTP-Bund spread could rise from the current 200 basis points to 300, is there anything to worry about or not? Financial crises, as we know, are not announced and we pray every day that they stay away from Italy, but a flutter of wings is enough to transform them into bolts from the blue.
