The spread has dropped below 200 points, but that's not enough. During his speech at the centenary meeting of ABI, the Italian banking association, the governor of the Bank of Italy Ignazio Visco invited the institutions to continue on the path of prudence: "Tensions on the government bond market have eased - Visco said to the audience in Piazza Affari, in Milan, also attended by the President of the Republic Sergio Mattarella -, but to consolidate these results and further reduce the cost of public debt, the prudent orientation of budgetary policy will have to be confirmed in the longer term”.
“If the decline in the spread – continued Visco – continued and the cost of debt fell below the nominal growth rate of GDP, as has already happened in the other countries of the euro area, it would be easier to reduce the ratio of debt to GDP . The reabsorption of the spread would also mitigate the risks for credit access conditions”. The landlord echoed the governor of the Bank of Italy Antonio Patuelli, president of Abi, in his opening speech, during which he also recalled the foundation, in 1919 in Milan, of the association, "to denote the extraordinary commitment of the banking world, in a phase of war economy". “The spread – added Patuelli – impoverishes the Italians: it must return close to zero, as in the first decade of the euro”.
Visco then spoke of the situation of the Italian banking system, which "has significantly strengthened in recent years, and the quality of credit has improved". The attention paid to the disbursement of loans (“Since mid-2018 there has been a tightening in the conditions of access, especially for small and central-southern businesses”) has contained the deterioration rate, so much so that compared at the peak of 2015, “non-performing exposures have more than halved”, going net of value adjustments from 196 to 88 billion last March, with the incidence on total loans decreasing from 9,8 to 4,2%. The recovery of the Italian banking sector has come despite a negative global economic scenario, according to the head of Bank of Italy: "The global economy is struggling to regain strength," he told the ABI assembly.
"In the bulletin that is being issued today - anticipates Visco - it appears that the rate of expansion of international trade is estimated at over two and a half points less than in 2018, at 1,5%". The big reasons for uncertainty are the usual three: trade war, slowdown of the Chinese economy and Brexit. “In the euro area – added the governor – growth remains weak: global uncertainties have a negative impact on exports, manufacturing production and the expectations of businesses and households”. It's right there “loss of strength in the industrial cycle”, according to Visco, to determine the stagnation of the Italian economy, which has recently been estimated by the EU a +0,1% in 2019 (data confirmed by Bank of Italy) and to just under 1% in the following two years. For the eurozone, the Brussels estimates for 2020 have been revised downwards to 1,4%.
Precisely for this reason, underlines the head of the Bank of Italy, the ECB has confirmed the highly expansionary orientation of its monetary policy, and in all probability it will be the same with Christine Lagarde, who will replace Mario Draghi in the Eurotower seat at the end of the year: “In the absence of improvements in the macroeconomic framework, further measures will be needed“, wished Visco, in line with what Draghi has already expressed recently.
He also spoke at the ABI event the Minister of Economy Giovanni Tria, which in the wake of what Visco said about the difficult international context, defined the Italian economy's performance in the current year as "satisfactory", albeit with the uncertainty of possible slowdowns mainly due to the difficulties of some European partners (indirect reference to Germany), which could also reverberate in 2020. Tria reiterated that the estimates for GDP for 2019 are 0,2%, therefore conflicting and more optimistic than those of Bank of Italy, claiming that "the results achieved have dispelled doubts about the government's policies, albeit in a profoundly changed international context, which is having a strong negative effect not only on exports but also on business investments”. On Europe, the minister confided that "concerns about financial stability are giving way to growth-oriented policies".
