Research Dept. News
|
|
|
|
Monthly Report, num 310 - February 2008
|
|
|
European Union - Italy
|
|
|
|
|
Italy: a crisis of confidence
|
|
Italy’s economic difficulties reduce confidence.
|
|
The news that Italy’s per capital GDP now stood below that of Spain in 2006, according to Eurostat figures, to paraphrase a recent European best-seller novel, has caused «astonishment and shudders» in Italian public opinion. While the figure by itself is a mere anecdote, the reaction it caused signifies the ill-feeling the economic situation is arousing in Italy. The country’s economy reported its last strong growth in 2000 when it reached 3.8% while since then showing an erratic path not going above 2% annual in any year. The loss of international competitiveness reported since its entry in the euro has affected the traditionally strong industrial sector which in turn has led to a situation where the foreign sector has been in deficit since 2004. At the end of 2006 and beginnings of 2007 an incipient improvement was noted when growth for the average of the fourth and first quarters stood at 2.6%.
|
|
Recovery at end of 2006 and start of 2007 weakens in course of year.
|
|
From then on, however, there has been a new change. Growth has dropped (in the second quarter it was 1.8% year-on-year and 1.9% in the third quarter). And inflation has risen (2.6% year-on-year in December, far from the 1.9% twelve months earlier). Private consumption has had difficulty in consolidating recovery and industrial production slipped back to the range of year-on-year drops in October and November. Exports too, which seemed to have found a stable growth path, again dropped in the 12 months ending in November. Taking all these indicators together, there is little doubt that the slowdown in the fourth quarter would have been substantial.
|
|
Bank of Italy puts out low growth scenario for 2008 and 2009.
|
|
Nevertheless, the worse may still be to come. In its latest economic bulletin, the Bank of Italy presented its macroeconomic scenario for 2008 and 2009. From estimated growth of 1.7% in 2007, according to the central bank’s forecasts, it will go rates of increase of the order of 1% in the next two years, as a result of an adverse international environment and also domestic difficulties. Specifically, the Bank of Italy expects that domestic demand will slow down in 2008 and 2009 due to low growth of consumption and investment and that the negative contribution of the foreign sector will not be corrected until 2009. Inflation, in turn, will show no let-up in 2008 given that on annual average it will maintain its current growth rate. In 2009, on the other hand, it is expected to return to levels of 2%. All this means little relief for the dejected Italian citizen who must now also deal with the fall of the Prodi government.
|
|
|
You can susbcribe now to be nofified by email every time the Monthly Report is updated in the internet.
|
All documents are in Adobe Acrobat format (PDF).
To view a document in PDF format you need the Adobe Acrobat Reader. If you don’t have it already loaded on your computer, you can donwload it now.
|
|
Direct link to the Research Dept. in your mobile
We'll send you a free SMS with the link
|
