2022 ended on the run, with GDP growth of 3,8%. What about 2023? Also in the first quarter of this year, the Italian economy was among the most dynamic in the euro area, with an increase of 0,6% over the three months. For the whole of 2023 Prometeia therefore estimates a growth of 1,1%, 0,4% more than the +0,7% expected in March. It can be read in Prometeia Forecast Report 2023 presented today, Friday 7 July.
Prometeia: "GDP higher than pre-Covid levels"
"Italian GDP is 2,5% higher than the pre-Covid one”, reads the document which underlines how this result is higher than that recorded by the other three major European countries.
The report also points out that the greater weakness in consumption is compared with the excellent performance of exports and most importantly, the exceptional investment cycle in constructioni, which have acted as a driving force for the entire supply chain.
Prometeia: "The recession can be avoided under 4 conditions"
According to Prometeia, despite the fact that the inflation rate was 6,4% in June, one of the highest in the Eurozone, there are conditions for the Italian economy to emerge from the inflationary crisis without experiencing a full-blown recession, but only a period of prolonged stagnation until inflation has been tamed.
The optimism of the consulting firm is based on 4 conditions. Number one: inflation will come down. The document speaks of a drop "already in the second half of 2023", thanks above all to the drop in energy prices. The second condition concerns the health of the labor market: wages are still reflecting the price increase to a limited extent and the defense of household disposable income is still entrusted to a healthy labor market which, with a falling unemployment rate and now at 7,6%, allows increase the number of income earners, many belonging to low-middle income families.
Condition number three concerns instead the extra “treasure” of accumulated extra savings by Italians during the pandemic, equal to approximately 200 billion euros, resources that support household demand. Finally Promethea signals the lasting support to growth represented by the Pnrr, which will serve as an impetus between now and 2026 and will support the construction sector as it grapples with the weakening of incentives for energy efficiency. Furthermore, in the medium term, the national recovery and resilience plan will stimulate the modernization and efficiency of many sectors of the Italian economy.
Prometeia: the obstacles to growth
“They exist however multiple obstacles in this path of soft landing for the Italian economy”, reports Prometeia, according to which, accomplice the attitude of central banks which will continue to be, albeit more gradually, restrictive in the medium term (Prometeia estimates that the ECB will raise policy rates by another 50 basis points, to then keep them at the new levels in 2024; and that the Fed will implement two increases of 25 basis points in July and November 2023), Italy will thus find itself navigating in a new context of positive real interest rates with the burden of a high public debt and grew up with the pandemic while Europe is discussing what form to give to tax rules, now suspended until the end of 2023.
“Regardless of the outcome of the negotiations, there is no doubt that, for a country with a high debt like ours, the scope for further expansionary policies will be limited. Have a growth booster tool like the Pnrr is therefore an opportunity not to be overlooked”, concludes the report.
