There are no encouraging signs from the European Commission, which has published some estimates on the Italian economy, in particular revising the GDP figure for 2020 and 2021 downwards and also an increase in the deficit/GDP and public debt between now and the next two years. Although the incoming maneuver is all in all welcome, Brussels therefore sees gray for the Italian economy: in 2019 it will in fact be in stagnation (+0,1%), while in 2020 the growth of our GDP will stop at 0,4%, and in 2021 at 0,7%. Lee's previous forecasts spoke of more sustained growth for 2020, around +0,7%, while those of the Italian government still indicate 0,6% for next year and 1% for 2021.
As regards the deficit/GDP ratio, this year it is estimated by the European Commission at 2,2%, but in 2020 it will rise to 2,3% (the government expects 2,2%) and in 2021 to 2,7% ( the government expects 1,8%). The deficit/GDP in structural terms, after having gone from 2,4% in 2018, would go to 2,2% in 2019 to worsen in 2020 to 2,5% and continue worsening on unchanged policies in 2021 at 2,9%. According to EU estimates, public debt is also destined to increase significantly, with the debt/GDP ratio set to pass from 136,2% in 2019 (after 134,8% in 2018) to 136,8% in 2020, to rise again in 2021 to 137,4%. Rome instead expects 135,2% in 2020, 133,4% in 2021.
“The economy it has stalled since early 2018 in an effort to escape the stagnation of low growth - explains the note issued by Brussels - and still there are no signs of a significant recovery. Leading economic indicators do not suggest an imminent recovery of production in the second half of the year and indeed there are growing signs that the weakness of the manufacturing sector is spreading to services", write the Brussels economists, who nonetheless suggest a glimmer of hope: "Favourable financial conditions and the overcoming of the political uncertainty can support growth beyond the short term”.
However, the comparison with the other European partners is merciless. In fact, GDP growth in Italy remains the lowest in the EU in both 2020 and 2021, as was already the case in 2019. This year, according to estimates by the EU Commission, the gap with respect to the euro area average will be one percentage point: 0,1% against 1,1%. Next year it will be a little lower, around 0,8% (Eurozone at 1,2%, Italy at 0,4%). In 2021, the gap will be halved compared to today, around 0,5% (Eurozone average 1,2%, Italy 0,7%). In Germany, GDP grows by 1,1% this year, in 2020 and 2021 by 1%; France 1,3%, 1,3% and 1,2% respectively; Spain 1,9%, 1,5% and 1,4%. In the UK, GDP growth will be 1,3% (after 1,4% in 2018), 1,4% and 1,4% respectively.
“All economies – commented Pierre Moscovici, outgoing commissioner for economic and financial affairs, taxation and customs – will continue to grow in the next two years, despite the strong adversities on the rise. The fundamentals of the economy are solid: after six years of growth, unemployment is at its lowest level since the beginning of the century and the aggregate deficit is less than 1% of GDP. However, the uphill road that awaits us does not allow us to rest on our laurels". According to Moscovici, the persistence of trade tensions between the United States and China and the high levels of political uncertainty, in particular regarding trade, "have held back investment, the manufacturing industry and international trade. With a global GDP growth set to remain modest, growth in Europe will depend on the strength of sectors more oriented towards the internal market”.
Moscovici also intervened specifically on the Italian situation: “There was an exchange of letters not in the same climate as last year. We have not thought of rejecting the Italian budget. We have asked for clarifications, we have continued these exchanges, the decisions we will take will be announced in our communications around 20 November. There are no two weights and two measures, one cannot compare this year's budget debate which is serious and represents a diversity of approach to the confrontation a year ago which boded badly for relations. The decision will not be a pushback of the Italian budget or the opening of a procedure now”.
