Economy destined to retreat by March. But the new government’s Stability Law could change the picture
The most feared word appears for the first time in the Def drafted by the Draghi government: “Italy, in the absence of interventions, will be in recession until the end of March”. The programmatic Budget Document, prepared by the Minister of Economy Daniele Franco and approved yesterday in the CDM, indicates the evolution of GDP and accounts under current legislation, or net estimates of economic policy programs that will be indicated in a later update by the new government after the possession. In short, if the new government were able to launch important expansionist policies, the picture would change.
The document, in line with the recent Def Update, foreshadows a gloomy scenario for GDP in the coming months, indicating three consecutive quarters of economic contraction (third and fourth quarters of 2022 and the first three months of 2023), from which the country would emerge. only in the second quarter of next year, therefore, from April. At the same time, as indicated by Nadef, the improvement in the deficit estimate opens up a margin of around 10 billion resources to be spent. The next steps will now be up to the new government.
“From Istat’s data for the first two quarters of the year – we read – the most up-to-date internal assessments indicate a slightly negative change in GDP in the third quarter as a result of a cyclical contraction in the value added of the manufacturing and construction industry, offset only partly due to an increase in services. For the fourth quarter, the range of the most up-to-date estimates is around a slight contraction of GDP in real terms, mainly attributable to the industrial sector”.
“A further decline in GDP is expected in the first quarter, followed by a recovery in economic activity from the second quarter onwards, driven by an increase in world demand, a fall in the price of natural gas (still to levels still high in relation to ‘normal’ conditions) and by a growing contribution of the Recovery and Resilience Plan “to GDP”. Council of Ministers on 28 September.
GDP should close the year with growth of 3.3%. The forecast for 2023 drops substantially from 2.4% in April to 0.6%; to then mark +1.8% in 2024 and +1.5% in 2025. The 2022 deficit will be at 5.1%, five decimal places below the April target of 5.6%, freeing up a leeway of approximately €9.5 billion. Net debt will be 3.4% in 2023, 3.5% in 2024 and 3.2% in 2025. The debt/GDP ratio is expected to drop from 150.3% in 2021 to 145.4% in 2022 (against 147 % indicated in April) and the fall also continues in 2023 with the trend at 143.2%. The fall would continue in the following years until reaching 139.3% in 2025.
Source: IL Tempo
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