Evolution …
…it's this one:
The IMF in October (some time has passed) predicted that the public balance (in orange) would return to just above -3% of GDP (that is, the public deficit just under 3% of GDP). Symmetrically, the recovery in consumption and investments would have brought the excess of private savings (in blue) back to 5% of GDP. The balance of the foreign sector (in green) practically immobile.
Forecasts, not only those of the IMF, always seem to be a bit made with a ruler. Of course we're dealing with an out-of-scale shock here. I believe that if the country starts again, then the green line (the balance of the foreign sector) will have to go back towards zero (that is, our surplus with foreign countries will close). Clearly this depends on many variables, obviously not only internal. An interesting exercise could be to verify how compatible this scenario is with the predictions of the old NADEF, or the next DEF. Maybe with a little more calm we do it.
Meanwhile, I add another important piece of history:
The debt / GDP ratio. Again, I think the valuations for this year are a bit pessimistic (the NADEF gave it 158%). The path of return envisaged by the IMF is quite similar to what we have managed to do on other occasions, but it is not very similar to what is foreseen by the NADEF.
This is a machine translation of a post (in Italian) written by Alberto Bagnai and published on Goofynomics at the URL https://goofynomics.blogspot.com/2021/02/levoluzione.html on Mon, 08 Feb 2021 20:27:00 +0000. Some rights reserved under CC BY-NC-ND 3.0 license.