Because entrepreneurs shouldn’t see the ecological transition as a cost. De Felice’s analysis (Intesa Sanpaolo)
What did Alessandro Spada (Assolombarda), De Felice (Intesa Sanpaolo) and Terzulli (Sace) say during the round table "The world in 2022: back to the future?" organized by Paolo Magri's Ispi
It is a future that resembles the past or the one that ISPI outlines in the report The world to come 2022 . The first post-pandemic year held the world in suspense in the uncertainty of what form the new normal would take. The future that is unfolding sees the return of inflation and a continuous increase in the prices of raw materials. Scenarios that we had forgotten and which ISPI discussed during the round table "The world in 2022: back to the future?" With Alessandro Spada , President of Assolombarda, Paolo Magri , Executive Vice President of ISPI, Alessandro Terzulli , Chief Economist of SACE and Gregorio De Felice , Chief Economist of Intesa Sanpaolo.
The return of inflation
“The Economist has defined Italy as the country of the year. Our country fared better than international competitors such as France and Spain ”, said Alessandro Spada, President of Assolombarda, the association that hosted the meeting. Our economy is called to experience the second phase, that of recovery, after the pandemic. “We have various factors holding back the recovery that affect the know-how of our businesses – continued President Spada -. The problems that we will face and that make next year more uncertain are the lasting increase in the prices of raw materials which, as of December 2021, are up 40% compared to the pre-covid period . The high price volatility complicates the planning of companies that struggle to have a certain size of operating costs to cope with. The growing scarcity of semi-finished products and some components, which are affected by both supply factors and bottlenecks in transport and, last but not least, the problem of inflation which in Italy was estimated to grow by 3.9% in December on an annual basis ".
The cost of energy: an emergency also for businesses
To make the lion's share driving the uncertainty are the increases in energy. “The price of energy is up 50% in December 2021 compared to the pre-covid period. This increase includes very different trends between energy sources including natural gas which records the most impressive rise – continues the president of Assolombarda -. The global natural gas index registers an increase of 383% and if we look at the European level it reaches 947% ”. Exorbitant increases that weigh even more for countries like Italy, which are considered to be our country's greatest dependence on fossil fuels. “According to the forecasts of Intesa San Paolo, the loss of GDP should reach half a percentage point, affecting both household consumption and business investments – adds President Spada -. The situation is quite alarming because companies are throttled by prices to the point that there is fear of a stoppage of production activities in particular for the most energy-intensive sectors even in the presence of orders. When I talk about energy-intensive companies, I mean steel, ceramics, paper mills, glass factories and all the companies in the chemical sector ".
The rising cost of energy causes inflation
The rise in the cost of raw materials and energy goods risks putting the European economy in a vicious circle that will cause new and stronger inflationary pressures. “ Confindustria has asked for the activation of a task force at Palazzo Chigi to deal with the emergency and to launch extraordinary measures. Our associates tell us that we have reached a critical point for which the increase in expenses can no longer be absorbed by companies but must be discharged onto the product – concludes the number one from Assolombarda -. Which means an increase in final prices which by further increasing inflation will reduce people's purchasing power. The Italian government has so far allocated 8 billion euros, however, mainly addressing families and small businesses in difficulty ".
The past that returns
"Inflation, is the distant past, takes us back 30 years". The vice president of ISPI Paolo Magri recalls how for some time the inflationary risk was not counted among the dangers for Western economies. “We are talking about the risk of hyperinflation , let's think of Turkey, which brings us back to Latin America of many years ago. And here we are talking about the increase in rates that is becoming more certain every day, the FED has said that it expects three increases in the next year ". The future that recalls the past also concerns the geopolitical chessboard. “ Afghanistan, which has come off the media radar, is in the most total catastrophe which is a humanitarian catastrophe and which can become a migratory catastrophe and which can become attacks, and there it will come back in the crosshairs. Afghanistan is a future that looks a lot like the past – continues Vice President Magri -. Iran is also a future that resembles the past and we do not know if it will be an Iran without an agreement on nuclear power, or a recent past, an Iran with an agreement and with prospects for Italian companies ”.
International trade: + 11.2% compared to 2020
An extremely positive note for the Italian economy is that of the trade balance. International trade marks an 11.2% increase in the first 10 months of 2021 compared to the first 10 months of 2020. According to Alessandro Terzulli , SACE chief economist. “Considering that in 2020 we had a -6% we can say that there has been a full recovery – continues the chief economist of SACE -. In 2022 it will be difficult to maintain this pace, but the forecasts that they formulated at the beginning of autumn, on 5%, are confirmed. Slow entry in 2022, exchanges will intensify at the end of the year ". In 2022 we will return to pre-crisis international trade growth rates and the performance of Italian exports seems very satisfactory. " In the first 10 months of the year we travel, according to Istat data at + 18.6% on 2020, and + 5% on the first 10 months of 2019 – continues Terzulli -. One question is that the growth of 2021 will be at the expense of that of 2022. At the beginning of autumn we were thinking of growth between 5 and 6%. Investment goods such as mechanical engineering products will do well ".
The strengthening of the banking system
The impossibility of having a normal social life has had as a side effect the increase in the savings of families, at least of those who have not suffered the negative repercussions of the lockdowns. “The banking system has strengthened, it is more capitalized. And then we have a firepower in terms of liquidity that is gigantic – says Gregorio De Felice , Chief Economist of Intesa Sanpaolo -. Let's not forget that bank deposits have increased since the beginning of the pandemic and we are not just talking about household savings. Greater savings for businesses and households. This means a potential for a strong recovery in consumption and investments ".
The growth of Italy cannot look to the past
Our country's growth objectives cannot be pre-covid ones. In this case, our future cannot be a return to the past. "Our goal is not only to reach all the parameters and requirements of the PNRR, but to now lay the groundwork for the PNRR to work even after it leads us to a potential growth rate that was not the pre-covid one, which was dramatic – continues Gregorio De Felice -. On average in the pre – covid decade we grew by 0.4% per year , Germany did 1.8% . So we have to aim for at least 1% as a goal. This allows us a more inclusive growth that also affects women, young people and regions of the South and allows us to have greater sustainability of the public debt. I'll just mention a number, if our growth went from 0.5% average to 1% average despite the increase in public debt we would tend to drop to 100% in 2041, it takes a long time but the signal is important for the markets " .
The distrust of the industrial system towards the ecological transition
Future means ecological transition. “I feel a lot of distrust about the ecological transition. Entrepreneurs see it as a cost, as an additional bureaucracy – said Gregorio De Felice -. Instead, we must consider it as an opportunity, it will be a new business line that will have great demand, think of Biden's United States. It will also be an opportunity to innovate and export green products, this applies to many sectors: fashion, packaging, construction, cars ". Our manufacturing has made enormous progress in the last 10 years, it is now being asked for another step forward. “This doesn't happen often in advanced markets. Strategies of internationalization, shift towards high or medium-high quality products abandoning those that were the productions where we would not have had a future because the competition from low-cost labor countries would have massacred us – concludes the economist De Felice -. The most emblematic figure is that in 10 years our trade surplus with foreign countries has gone from 30 billion euros, net of the energy bill, to 100 billion euros and we expect it to reach 120 billion in 2023 ”.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/energia/perche-gli-imprenditori-non-devono-vedere-la-transizione-ecologica-come-un-costo-lanalisi-di-de-felice-intesa-sanpaolo/ on Sun, 16 Jan 2022 07:18:47 +0000.