What Def will be with these moonshines?
We present ourselves on the threshold of another recession with a quarterly GDP that has not yet recovered the pre-pandemic level. It is not clear how it is still possible to adopt a still prudent public budget approach. Giuseppe Liturri's comment
The GDP growth forecasts for 2022 have long since begun the march of the shrimp. It seems light years have passed since last September when, on the occasion of the update note to the Def, the magnificent and progressive destinies that unfolded in front of our country, showed an appreciable + 4.7% compared to 2021.
Then came the confrontation with reality. First, the Bank of Italy in January with 3.8% and, lastly, Prometeia with 2.3%, brought everyone back down to earth. And that's not necessarily the end of it.
In fact, already in September the increase in the prices of electricity and gas was underway and all the problems on the raw materials market were already evident and were producing an evident slowdown in the level of economic activity. But the Mef models, with the authoritative comfort of the ECB's forecasts, were still all oriented towards considering these phenomena as transitory. But, as we know, there is nothing more definitive than the transitory, and today those predictions only arouse hilarity.
The risk of writing numbers on water has also led the government of Mario Draghi to give more mild advice, which has renounced the intention of bringing forward the presentation of the Def this week and has postponed everything to the next.
Consequently, the space available for further expansion measures of the state budget remains completely uncertain – the so-called "deviation", to be authorized with a specific parliamentary procedure – which are however decisive in allowing significant aid to families and businesses that are now supporting for some months now, energy and gas costs multiplied up to 4 times compared to 2020.
The three law decrees (n. 4, 17 and 21) passed by the government starting from January contain measures for about 14 billion. For comparison, Germany has announced measures worth 32 billion in the last 4 weeks.
The + 2.3% of the latest forecasts, although constituting an absolute non-negligible figure (let's not forget that before 2019, we came from years of growth with numbers from the telephone area code), must be observed in perspective, according to two guidelines.
The first is the one that makes us observe that the figure of + 2.3% is precisely what Istat considered as growth already acquired for 2022, assuming that the GDP of the fourth quarter of 2021 (428 billion) remained unchanged for all subsequent quarters of the current year. And this hypothesis, in light of the first negative signs of the first quarter, is not so obvious.
The second observation concerns the comparison with the fourth quarter of 2019, the last one before the chaos, when GDP was 431 billion. So we present ourselves on the threshold of another recession, the causes of which seem to be much deeper and more persistent than those of the previous one, with a quarterly GDP that has not yet recovered to its pre-pandemic level.
It is not clear how, in the face of similar prospects, it is still possible to adopt a prudent public budget approach tending to return to the parameters of the Stability Pact. But it will be enough to wait a few days to get the answer.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/che-def-sara-con-questi-pessimi-chiari-di-luna/ on Wed, 30 Mar 2022 11:00:25 +0000.