La European Commission cut the estimates on the Italian GDP. In fact, the EU's spring estimates forecast a growth in Italy's GDP of 1,1% in 2016, a cut of three tenths of a percentage point compared to the 1,4% that the Commission had assumed for three months does. For 2017, however, the growth forecast of 1,3% was confirmed. The estimates of Italian Government they speak of a growth of 1,2% for the current year and 1,4% for the next.
Compared to the beginning of February, the European Commission has reduced the GDP growth estimate even by the whole Eurozone: the gross domestic product of the currency union will grow by 1,6% in 2016 and by 1,8% in 2017 compared to the previous +1,7% and +1,9%. The inflation figure has been corrected downwards: now Brussels expects 0,2% for this year against the previous estimate of 0,5%, and for 2017 1,4% against the previous one of 1,5%.
The Brussels conclusion is that "considerable risks" weigh on the European economy. The economic activity continues, they strengthen a bit, however, the prospects are not rosy and the risk factors of worsening appear to be greater than the risks of improvement. "Substantial uncertainty surrounds the forecasts," admits the European Commission. Here is the list of downside risks: lower growth in emerging markets especially China, uncertainties from geopolitical tensions, brutal movements in oil prices, turmoil in financial markets, slower pace of implementation of structural reforms in the EU and in the euro zone, uncertainty due to the possibility of the United Kingdom leaving the EU. On the other hand, they may play in favor of a positive scenario, the impact of structural reforms may be stronger than expected and the transmission of the ECB's expansionary monetary policy to the real economy may prove to be stronger.
On the other hand, the estimate on the unemployment in the currency union: the annual rate goes from 10,9% in 2015 to 10,3% in 2016 to 9,9% in 2017 compared to last February's forecast, which indicated 11% in 2015, 10,5% in 2016 and 10,2% in 2017. In Italy the unemployment rate is expected at 11,4% on 2016 and goes to 11,2 from 11,3% on 2017.
Remaining on Italy, the forecasts on the relationship also change deficit/GDP. The estimate for 2016 drops to 2,4% compared to the forecast of 2,5% at the beginning of February. In 2017 the deficit/GDP should reach 1,9%, compared to the previous 1,5%. The government estimates 2,3% and 1,8% respectively. The debt/GDP estimate in 2016 was corrected upwards compared to February to 132,7% (+0,3%), for 2017 to 131,8% (+1,2%). The government expects 132,4% and 130,9% respectively.
The European Commission's assessment of Italy speaks of a recovery that continues, albeit at a moderate pace. GDP growth remains below that of the Eurozone by 0,5% both this year and in 2017, reducing a gap that was 2015% in 1,1.
Stability Law
The European Commission will announce its final judgment on the Italian Stability Law with the document on the so-called "country specific" recommendations arriving on May 18, while the parties are still trying to find an agreement on the request for a discount on the deficit equal to 0,8 .XNUMX% of GDP, currently incorporated into next year's budget.
The EU head of economic and financial affairs Pierre Moscovici speaks, in this case, of a “process still in progress. The Italian economy has returned to growth but the deficit is decreasing slightly: we are discussing this with the government, as well as the request for margins of flexibility on the deficit”. “Since the beginning of the year – concluded Moscovici – Padoan and I have already met more than ten times, we work without interruption to find common ground” he adds.
