“The macroeconomic framework envisaged in the Nadef is overall plausible even if slightly optimistic, in particular in light of the most recent internal and international developments”. It is the opinion expressed by Sergio Nicoletti Altimari, head of the Economics and Statistics Department of the Bank of Italy, during thehearing on Nadef before the budget commissions of the Senate and Chamber and which will arrive in the halls of Palazzo Madama and Montecitorio on Wednesday 11 October. A series of interventions from which a general climate of concern for the country's growth prospects, aggravated by new Israeli-Palestinian conflict. Similar messages also arrive fromIstat which sees a "phase of weakness" for our economy for the next few months, from Court of Auditors according to which "the trend picture described outlines very narrow spaces on debt and Pnrr" and from Cnel therefore the new conflict in the Middle East "risks producing even more unbalanced imbalances than the war in Ukraine".
According to Altimari “i risks which weigh on economic activity are high and oriented downwards. Geopolitical tensions - linked both to the conflict in Ukraine and to the recent attacks in Israel - generate strong uncertainty about the growth prospects. The latter could also be influenced by the weakening of the Chinese economy and, in the euro area, by a particularly intense transmission of the monetary tightening, with a further tightening of credit supply conditions".
Bank of Italy, “Debt/GDP ratio is a serious element of vulnerability”
“In such a fragile context – continued Altimari – it is important that the budgetary policy be conducted with extremes caution. Choices perceived as not fully in line with the objective of sustainability of public finances could tighten already restrictive financing conditions, heightening uncertainties about macroeconomic developments. The assessments relating to the growth potential of the economy have a significant impact on these perceptions, to increase which investments and structural reforms are crucial", observed the head of the Economics and Statistics Department of Via Nazionale, adding that "the high ratio between public debt and GDP it's a serious element of vulnerability: reduces budgetary space to deal with possible future adverse shocks; exposes the country to the risk of tensions on the financial markets; it increases the cost of debt for the State, and ultimately for families and businesses."
Faced with "new burdens of a permanent nature (such as those connected with the reduction in the number of Irpef rates) or difficult to remove (such as, presumably, those resulting from the cut in social contributions) it is always advisable to identify certain coverage, of an adequate and with an equally permanent nature", continued the head of the Economics and Statistics Department of Bank of Italy, adding that "this is particularly important if small debt reductions are planned in contexts of high macroeconomic uncertainty".
The strengths of the Italian economy according to Bankitalia
But it's not all black. Because according to Via Nazionale “theItalian economy numerous exhibitions strengths. It has regained considerable competitiveness on international markets. Businesses have made huge investments showing confidence in the future and the employment rate has reached the highest value since the XNUMXs. The financial sector is also solid thanks to low private debt. These are characteristics that allow delays that remain in several areas to be transformed into development opportunities. The necessary action on public finances must be accompanied by an incisive reform effort aimed at raising the growth potential of the economy".
Bank of Italy draws attention to the Pnrr
And then there is the National Recovery and Resilience Plan, “to whose timely implementation the utmost commitment must be dedicated”, according to Altimari. “It is important that the rationalization of interventions and the reallocation of resources, as in the case of RePowerEU, take place while safeguarding the overall objectives and avoiding accumulating delays”. Then the jab. “The Government reports that it has carried out a remodulation of the expenditure connected with the Recovery and Resilience Device (DRR), postponing interventions initially planned in 2023 and (to a lesser extent) in 2024 to the following two years. Despite the relevance of this aspect, Nadef does not provide specific indications regarding the new profile. Postponements have also been decided several times in the past."
Istat: “The weakness of the economy is confirmed”
“The most recent economic indicators suggest that the weak phase of the Italian economy will continue in the coming months”. This is what was stated by the acting president of Istat Francesco Maria Chelli still at the hearing on Nadef. “Netting the trend of international “exogenous” factors, elements slowing growth are also linked to stricter credit access conditions for families and businesses and the slow recovery of families' purchasing power”. In measurable terms “the investment stimulus provided by the Pnrr resources should manifest itself more fully starting from 2024; the implementation of public investments and reforms envisaged by the Pnrr will be extremely important for achieving the growth objectives set by the government".
Brunetta (Cnel): “Very narrow, impervious and bumpy path”
What is looming is "an economic policy path, for a country like ours with high debt and low growth, very narrow and I would say not only narrow but also impervious, difficult and disjointed, very difficult to navigate". The president of the CNEL added, Renato Brunetta, also reiterating that there is "absolute uncertainty and volatility due to the sum of two very serious tragic elements: one continuing and the other whose potential is not yet known", in reference to the conflicts in Ukraine and the Middle East and that the latter risks having more "unbalancing" effects than the first.
