This is how the Italian economy is recovering

2 September 20213 years ago babelfish

What do the economic data on GDP and work show? Gianfranco Polillo's analysis

At the Daily Fact the definitive Istat certification on the good moment that the Italian economy is going through is not liked even this time. The comment was less acidic than a few weeks ago: when the same numbers were indicated, albeit provisionally, a growth in GDP in the second quarter of the year, equal to 2.7 percent. Then the excuse was put forward that that good result was nothing more than a simple rebound compared to the sharp fall of the previous months. Today the judgment is more cautious, but without the shadow of a minimum of enthusiasm.

“The trend figure – this is the comment in the subtitle – is the highest ever recorded since the beginning of the current historical series, in 1995: after all, Italy is the European country that lost the most ground last year”. Since the numbers cannot be denied, it is better to underline how, in the second quarter of 2020, Italy had suffered a major fall. This, however, had not occurred in France where the rebound was stronger: + 18.7%. Against 17 percent Italian. But if from the trend (year on year) to the economic trend (quarter after quarter), the reserves of Il Fatto vanish like snow in the sun.

That attitude is however understandable. They are angry with the great usurper. That Mario Draghi who took the place of the best Prime Minister that Italy, from De Gasperi onwards, has ever had. Especially with the author of the Conticidio , appropriately documented in the yellow book by Marco Travaglio, which responds to the name of Matteo Renzi. That fall was an agitated red cloth in front of a raging bull. A trauma so profound as to alter the very perception of reality. Which for a newspaper is not quite the path to the Pulitzer Prize.

Sin! Because after so many negative quarters Italy, this time, can stand tall. Discarded the old black jersey, it is at the top of the main international rankings. In the first quarter, according to the comparison provided by the OECD, things had not gone so well. The rate of GDP growth had been a modest 0.3 percent. While most of the other countries were in negative territory. Germany , for example, suffered a 2 per cent drop, the French figure was stationary, Spain down by 0.4 per cent. Compared to the G7 average of 0.4 per cent, Italy – one of the few European countries – was only slightly behind.

Situation improved and greatly in the second quarter. With Italy grown, as mentioned by 2.7 percent, even if overtaken by Spain, the Netherlands, Austria, the United Kingdom and Portugal. Which, however, had fared much worse in the first quarter. The figures for the entire semester therefore show Italy in the front line: head to head with Great Britain (3.15 per cent against the 2.91 tricolor) and Austria (3.11 per cent). Less well, however, are Spain (2.32 per cent) and France which grows just over half (1.15 per cent). While Germany is still suffering (-0.40 per cent).

In assessing the trend of the Italian economy in the second quarter, other variables must also be considered. The strongest contribution to GDP growth came from consumption, which finally started up again after a long period of asthenia. The role of families, which contributed to the growth of GDP by 2.8 per cent, was decisive. Held, however, by lower public consumption for 0.2 per cent.

The contribution from abroad (exports minus imports) was lower than in the past, equal to 0.3 per cent. However, the trade surplus turned out to be anything but negligible: amounting to over 13.5 billion. And a percentage in relation to GDP of over 3 percent. These are certainly not the values of the third quarter of last year, when the contribution to GDP growth was even 4.4 per cent, for a value of over 22 billion. But still more than positive.

They show that, despite the great international uncertainties (bottleneck in the supply of some raw materials, microchips, price increases and shortages of materials) Italian companies are able to maintain their positions. In many cases suffering less than their competitors. According to Eurostat, in the second quarter, the Italian balance of payments (current account) was still the third in the Eurozone. After Germany and Holland. It did not undergo major changes compared to the previous quarter, unlike both the Netherlands which showed a notable improvement; than in Germany where, on the other hand, there was a fall of almost 13 per cent.

Data, however, that do not lead to claim victory. We will have to wait until September to see how it goes. If the clouds that are glimpsed on the horizon, both in terms of trade and monetary policy, are blown away by a healthy breeze. In the meantime, let's be satisfied with the glass half full. Above all the changes that have occurred in the deeper structures of the Italian economy. After a long lean period, investments are recovering. Fourth quarter with a positive sign for GDP growth.

Compared to the first quarter of 2019, overall investments increased by 6 percent. Almost 10 per cent in housing and double in non-residential buildings and other infrastructure works. The trend in the purchase of machinery is less well, which remain stationary, while the means of transport are in sharp decline. Here there is still a decline of almost 10 percent, demonstrating how deep the automotive crisis is. An element to reflect on, also in view of the European commitments to 2035, aimed at prohibiting the production of new diesel or petrol vehicles.

Finally, one last, albeit subtle, reason for optimism. Second quarter GDP went, as it did, also due to a sharp reduction in inventories. Which resulted in a lowering of the bar of about 0.8 points. It can therefore be argued that potential GDP growth was not 2.7, but 3.5 per cent. Obviously, stocks will need to be replenished in the coming quarters. Considering that the change acquired for the current year is equal to 4.7 per cent, net of that fall (of about 1 point of GDP in the previous four quarters) it is easy to hypothesize – the daily fact does not want it – a much higher year-end growth. Which are the figures that, out of luck, are whispered among those who still persist in considering Mario Draghi a resource for the Republic.

This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/ecco-come-leconomia-italiana-si-riprende/ on Thu, 02 Sep 2021 07:40:11 +0000.