– Italy, the first European country hit by the pandemic, is now changing gear on its recovery path after an extensive vaccination program, and thanks to robust investments and expanding exports. The Financial Times notes this in an ad hoc analysis of our country, recalling how the estimates of the GDP of the Belpaese are 6% this year, in line with the OECD and international private forecasts, and much stronger than the 4.5% expected in April.
The authoritative British newspaper underlines that, as noted by Consensus Economics, “Italy’s economic growth has had the largest rise of any other G7 country in the past five months“And citing the economists’ analyzes, he argues that our economy is currently traveling” with the wind in its sails. “
In a favorable position for reforms
For the FT, “this is a marked change for a country that has suffered years of economic stagnation, dragging living standards below the EU average”. Economists hope it can be a stepping stone “to more lasting change, thanks to an ambitious program of EU.funded reforms”.
In the words of Laurence Boone, chief economist of the OECD, “for the first time in many decades, Italy is in a favorable positionBoone also pointed out that Italy is starting to face well.known growth brakes, such as an outdated civil justice system and public administration and its ineffective competition laws.
“Italy today is in a position to reset its economy,” Boone added. The FT recalls how Draghi, the former president of the European Central Bank, attributed much of the improvement in prospects this year to his government’s vaccination campaign. The percentage of people fully vaccinated in Italy is the second largest among the G7 countries, thanks also to the establishment of the mandatory green pass for most workers and access to most public places.
Exceptional growth estimates
Nicola Nobile, an economist at Oxford Economics, expects the Italian economy to grow by about 2.5% in the third quarter, after a higher.than.expected rebound of 2.7% in the previous quarter. Also recalling the words of Emma Marcegaglia, president of the B20 international business summit, investments are “booming”, thanks to the incentives supported by the government for the improvement of energy efficiency and the purchase of machinery and equipment, as well as greater investor confidence in Draghi’s government after years of political instability.
Many companies have also stepped up digital investments to adapt to the pandemic – helping Italy, which has lagged behind other EU countries in preparing for e.commerce, to catch up. Italian investments were 5% above pre.pandemic levels in the second quarter, stronger than a marginal contraction in Germany and a 4.5% decline in the UK.
Exports are also supporting the post.pandemic rebound, with Italy less affected than some countries by supply chain disruption thanks to less reliance on semiconductor imports. In the first seven months of the year, the value of Italian exports of goods increased by 4 percent compared to the same period in 2019, better than the stagnation of Germany and the contraction of France. And in this direction, writes the FT, reporting Marcegaglia’s statements, “the producers have proved agile in adapting to the changes in national and international restrictions”.
The green and digital transition could continue at a much faster pace if Italy gets the € 205 billion from the EU’s “Next Generation” recovery plan that was promised if the key reforms and targets are met. “This is by far the largest EU commitment to a member state and would be Italy’s largest support package since the Marshall Plan after World War II.”
The optimism of the government
The OECD also, recalls the FT, expects Italy’s economic production to return to pre.pandemic levels by the beginning of 2022, faster than in previous estimates and much faster than the recovery in previous recessions – albeit later than in most advanced economies.
“The Italian government is certainly optimistic,” points out the FT. “As good as all this modernization may seem, Italy’s fragmented political system has often meant that reforms initiated by one government are reversed or abandoned by the next,” he said. said Nick Andrews, an economist at investment research firm Gavekal Research.
Meanwhile, there are short.term concerns. Italy is already worried about the surge in energy prices in Europe and will spend 4 billion euros to try to balance the rise in bills. For the FT, “a prolonged crisis could slow the pace of recovery. Weakening demand following a prolonged supply chain disruption and slowing Chinese economic growth create further headwinds for the country and the global economy. “.
But the optimism of Italian businesses and consumers has remained at its peak for almost a decade. Naturally, the FT always points out, citing some economists, we must be cautious and continue to monitor critical factors such as the cost of raw materials and transport.