A little better this year, a little worse next year. This is the updated estimate on Italian GDP by Bank of Italy, which revises the figure for 0,2 to a "marginal" increase to 0,1% (from +2019%), while it would weaken in the following two years, reaching 0,5% (from +0,8%) in 2020 and 0,9% in 2021, to then recover to 1,1% in 2022. Compared to the previous July projections, the estimate for 2020 is affected by the more accentuated weakness of the international situation largely, but not entirely, offset by the stimulus coming from the lower rates of interest.
The Bank of Italy added that both household consumption and investment in capital goods will contribute to product growth, driven by favorable financing conditions. But growth will remain more moderate than that observed in the last three years, reflecting the increased uncertainty about the prospects for demand. Exports would increase in line with the moderate growth in foreign demand for Italian products, while as regards employment would expand at slightly lower rates on average to those of the product. The average annual unemployment rate is expected to be 10% (July estimate of 10,2) for 2019, 9,7% (10,2) in 2020 and 9,6% (10,0) in 2021.
The macro scenario of the Bank of Italy is based on the hypothesis of a very gradual strengthening of world trade, after the setback observed during 2019. The profile of interest rates and the price of crude oil is that implicit in the market prices in the ten working days ending on 19 November and incorporates a yield on ten-year government bonds lower than in the July forecasting exercise (by around 50 basis points in 2019 and 90 basis points in the two-year period 2020-21), thanks to more expansionary monetary policy and the reduction in sovereign risk premiums.
In accordance with the Eurosystem guidelines, the scenario does not incorporate the effects of the increase in indirect taxes envisaged by the safeguard clauses still active for the two-year period 2021-2022. The scenario of the new macroeconomic projections, finally notes Bankitalia, is subject to various risks: global uncertainty, trade tensions and the economic performance of our main European partners, which could affect our exports and the propensity to invest of businesses, as well as the possibility that new episodes of financial volatility will affect costs financing for households and businesses.
