According to the European Commission, the Italian Gross Domestic Product will grow by 2018% in 1,3. For 2019, the expected growth is instead equal to 1,1%. A good news? Not really given that the percentages estimated by Brussels have been revised downwards compared to those released in early May when an increase in GDP of 1,5% in 2018 and 1,2% in 2019 was indicated.
The cut was determined not only by the global political turmoil that could affect our economy, but also due to "internal political uncertainty", reports Brussels.
Compared to growth rate of the Eurozone, the difference will be 0,8 percentage points in 2018 and 0,9 in 2019. Simply put, Italy will grow at a slower pace than the entire European Union. But we are in good company. Like us, both this year and next year, the United Kingdom will do the same, but it is grappling with a historic turning point such as Brexit.
We recall that the latest government forecasts, released at the end of April of this year, with unchanged policies, indicated 1,5% in 2018 and 1,4% in 2019.
Brussels has revised its estimates for the Eurozone but stresses that growth "remains strong" despite "rising trade tensions, higher oil prices and political uncertainty in some member states may have played a role" in the economic slowdown. This year it has gone from the 2,3% expected at the beginning of May to 2,1% and confirmed at 2% next year. In the EU, the downward revision was 0,2 percentage points: 2,3% instead of 2,5% in 2018, 2,1% instead of 2,2% in 2019.
La Germany will grow by 1,9% in both years, France by 1,7%, Spain by 2,8% this year and 2,4% next year. Greece stable at 1,9% and 2,3% respectively. United Kingdom down compared to previous estimates: 1,3% in 2018 and 1,2% in 2019.
Although Italy grew by 0,3% in the first quarter of 2018, our economy "has not completely escaped the general loss of growth momentum in advanced countries". While private consumption and inventories continue to support the expansion of production, the weakness of investments and exports are a brake on growth.
According to the EU, “The downside risks to growth prospects have become more relevant amid increased global and domestic political uncertainty”. Not only that: "At the domestic level, any renewed concern or uncertainty about economic policies and the possible transfer of higher sovereign yields to corporate finance costs - the EU forecast report continues - could worsen financing conditions and weaken demand internal".
In detail, the medium-term outlook for the manufacturing sector points to some weakness: the main indicators suggest that the current recovery "should weaken but continue to remain above potential rates".
It should be emphasized that the EU Commission's estimates are based on "unchanged government policies for 2019, therefore not taking into account the effects of the increase in VAT and excise duties contained in the legislation for next year as a "safeguard" in the 2018 budget.
Domestic demand will remain the main driver of growth in a challenging external environment. Investing resumes thanks to favorable financial conditions and tax incentives "even if the volatility of the financial market which reflects global and internal uncertainty will cause some investment decisions to be postponed in the short term". In 2019, the exhaustion of tax incentives and the gradual increase in interest rates will "dampen the increase in investment".
