The Italian economy is looking better. An “improving” economic scenario is banishing the spectre of recession, at least for the first quarter of 2023. That’s the picture emerging from the Study Centre of Confindustria, which acts as Italy’s biggest employer association and chamber of commerce.
- Despite growth with “low dynamics, around +0.6%,” the drop in energy prices – which began at the end of 2022 – is making previous forecasts look too grim…
- … and Confindustria’s analysis goes so far as to assume a “turnaround” on rate hikes, not before “another couple of increases,” but within the year, as the energy-driven inflation subsides and so does the need to fight it.
Respite from energy bills. European gas prices are now down to below 50 megawatts/hour, down from the August peak of nearly 300. It’s “a good premise for the first quarter, the costs of businesses and for the path of return” from the peak of inflation.
- The fall in the price of energy “is favouring the reduction of inflation in Italy and Europe – although it still runs high – and this suggests an end to the rise in rates by 2023”.
- While general inflation is falling, the cost of non-energy raw materials is rising (+16.8% for metals). The dynamics of prices net of energy and food also rose (+4.6% from +4.2%).
- Still, the Study Centre forecasts “a generalised and important upward revision compared to the post-summer estimates, when stagnation or moderate recession was expected.”
Italy holding up. The country is proving “very resilient,” both production- and consumption-wise. Industrial production rebounded in January (+1.6%) following three months of decline, and the trend, according to Confindustria, is supposed to hold.
- Export also marked new records in 2022, with Italy surpassing France and Germany, although the Study Centre believes they could ebb.
- Meanwhile, household consumption is resisting thanks to “cautious consumption decisions, due to high inflation,” and “spending shifted even more towards discount stores.”
- Finally, notes the analysis, there are more people employed as well as more labour shortages.