Italy is doing better than expected in 2022. Thanks to the recovery of tourism and industrial activity, the growth of the beautiful country is expected to fly this year at 3%. But already in 2023 there will be a “significant slowdown” linked in part to high energy prices. In this context it is necessary to continue with the reforms. This is the photograph taken by the International Monetary Fund which, noting the “increased political uncertainty”, hopes that the path of reform will not be abandoned.
The S&P agency also focuses on the reforms which, confirming Italy’s BBB rating, downgrades its outlook to stable from positive precisely following the risks for reforms linked to early elections. “The stable outlook reflects the risks that a slowdown or reversal of reforms” could have for the Italian economy and public finances, says S&P, underlining how “the revision also reflects high inflation and risks to the energy supplies of the ‘Italy”. S&P does not foresee any immediate budgetary risks from the transition to the new government after the elections but notes that the early vote “comes at a difficult time” for the Italian and European governments. The agency also does not rule out a complete stop of gas flows from Russia: this – he explains – would cause Italy to record negative GDP growth in 2023 and 2024. At the moment S&P estimates Italian growth at + 2.8% in 2022 and 1.9% in 2023. “This is an important moment because there are numerous reforms and programs under the European plan. We hope that the reforms are made, they would be useful for Italy. Whatever the government in power we hope you will support them, “says IMF chief economist Pierre-Olivier Gourinchas, underlining how the basic scenario of the Fund for Italy was drawn up before the latest political events and includes reforms. After + 3% in 2022 (+0.7 percentage points compared to the April forecasts), the Italian GDP will slow down in 2023 to + 0.7%, less than the 1.7% estimated only three months ago. Moody’s also revises the growth of Italy downwards: the GDP of Italy is expected to grow this year by 2.2% and the next by 0.8% compared to + 2.3% and + 1.7% estimated previously.
The IMF scissoring for Italy in 2023 is part of a generalized contrast to the slowdown of the world economy. The risks of recession have in fact risen, and are “particularly accentuated” for 2023, between the war in Ukraine and its effects, Covid and inflation. Prices, the IMF admits, are high and will remain so: the fight against inflation is the priority, Washington experts say within hours of the new Fed interest rate hike. The world economy is in danger of finding itself ” on the verge of a recession, “explains Gourinchas. In the update of the World Economic Outlook, the Fund cuts the global growth estimates to + 3.6% this year and to + 2.9% the next, and those of the Eurozone and the United States. And warns: if some of the downside risks weighing on the outlook materialize, the world could slow further, falling to + 2.6% in 2022 and + 2.0% in 2023, a level it has only touched five times since 1970. “In this scenario, both the United States and the euro area would experience growth close to zero next year, with negative effects for the rest of the world”, highlights the chief economist of the IMF. The chances of a recession for the G7 economies are “almost 15%”, or “four times the usual level”, notes the Fund. For Germany they are almost “one in four”.
For the United States, “some indicators” suggest that “a technical recession may already have begun”, the Fund observes, however specifying how in its opinion the US can still avoid a recession even if the road is very narrow and a small shock would be enough to change the picture. Attention is high on American GDP in the second quarter: according to analysts, the economy may have contracted again, effectively marking the entry of the States into a technical recession. The White House has been minimizing for days despite the awareness of the political risks that this would mean a few months before the November mid-term elections. “I don’t think we’re going to see a recession,” Joe Biden said in the last few hours echoing Janet Yellen. The secretary of the Treasury, whose international stature and credibility are not questioned even by the Republicans, will present himself to the Americans on July 28, GDP day, for a press conference. Perhaps, say the evil ones, to reassure.
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