Italy will close 2021 with one GDP growth by 6,3% and 4% in 2022 which will also continue in the following years, at a more contained pace but higher than the data of the pre-Covid period and the European average (+2% in 2024). In addition to the pandemic, economic growth will also depend on theinflation: it is forecast at 1,8% in 2021, from 2,1% in 2022 to then fall back to 1,6% in 2024. It cannot be excluded that inflation will be more persistent and that central banks will have to intervene in more aggressive way with more restrictive effects on the activity. These are the forecasts on our country by Promethea, an Italian consultancy, software development and economic research company for businesses and financial intermediaries.
The prospects for the trend of the Italian recovery remain positive, despite the expected slowdown for the fourth quarter which is affected by the uncertainty of the Omicron variant. In any case, our country appears among the countries best positioned in the fight against Covid-19. In its Prometeria report, I identified the risk factors and opportunities that will direct the Italian economy in one way or another
In the third quarter of the year there was an increase in GDP of 2,6% over the previous quarter, +3,8% over the previous year. The recovery in household spending (+3% on the previous quarter), in particular in services (+8%) with the end of the lockdowns and favored by the tourist season, drove the growth. Investments in capital goods also held up (+4,5%) which have now recovered to pre-crisis levels. Investments in construction are growing, driven by tax incentives. Good export performance.
However, a slowdown in growth is evident: economic information signals a flattening of the cycle starting from the summer, already reflected in the monthly indexes of industrial production which have stopped on average since July, which however seem to have undergone a slight turnaround in November.
With regard to the industrial production: the index will stand at +11% in 2021 and at +2,4% in 2022. Thanks to the production of means of transport and the driving force of exports, especially in the food sector and the supply chain activated by construction. According to Prometeia these factors will continue to protect our manufacturing from bottlenecks in the supply of materials and expensive energy, provided that the turbulence does not last too long.
With reference to commodity e semi-finished products, the available signals show an improvement which, associated with the lower Italian exposure, would allow the country to recover full operations within a few months.
Economic growth will also depend on families. There propensity to save it has increased significantly (even over 20%) during the pandemic. According to the Italian company's report, these levels will only be recovered in 2024 and that the accumulated savings will not be divested. If households regain confidence in the economic outlook faster and inflation does not erode their purchasing power, then the recovery could be even greater.
A recovery that will be supported by a expansionary fiscal policy, even if most of the exceptional interventions will disappear. Prometeia estimates a debt/GDP reduction for 2021 to 152,6% and 146,4% in 2024. A path that could find it difficult to combine with the European budgetary rules in the current configuration.
But Italy has one more weapon, being among the major beneficiaries of the funds Next Generation Eu and its use will be crucial for growth up to 2026 and beyond. Between now and 2024 Prometeia estimates an annual growth of 0,4% thanks to European funds. If this possibility is not seized, the risk of continuing on the path of the past decades of decline and estrangement from the main European partners will become tangible.
But in order for the Pnrr to continue its journey, it takes the political stability. The coming months will be important to understand if and how the current balance will change. In the worst case, all this could be reflected in a widening of the spread paid by our sovereign bonds compared to the German ones. In the base scenario, the analyst firm expects a BTP-Bund spread that is still stable between 120 and 130 basis points in 2022.
