by Virna Bottarelli |
The main data on the Italian economy that emerge from the report Istat published on December 3 and entitled "The outlook for the Italian economy in 2020-2021" indicate a contraction of almost 9% of GDP in 2020 and a partial recovery of +4% in 2021.The forecasting framework is strongly conditioned by the evolution of the health emergency and the availability and timing of administration of the Covid vaccine19. No less important is the definition of the measures related to the Recovery and Resilience Facility Programwhich could represent a stimulus to investments.
The international framework
After the decisive recovery of production and trade rhythms during the summer months, the new measures to contain contagions adopted in the autumn may have negatively affected the outlook for the fourth quarter (data on the performance of the Italian economy in November and December are released on 13 January, while a preliminary estimate of GDP based on the Fourth Quarter 2020 will be published on 2 February ed.). The European Commission for 2020 forecasts a sharp decline (-10.2%) in imports of goods and services in volume and a reduction in global GDP in real terms (-4.3% from +2.9% in 2019), as a synthesis of heterogeneous trends between areas and countries: emerging and developing markets should have marked a performance less negative than that of advanced countries and know a more robust recovery for 2021. In the euro area, GDP in the third quarter showed a marked economic rebound (+12,6% after -11,8% in the previous quarter). In national terms, German GDP grew by 8,5% (-9,8% in Q2), French GDP by 18,7% (-13,8% in Q2) and Spanish GDP by 16,7% (-17,8% in Q2).
The measures to contain the epidemic led to a very sharp fall in demand and oil prices, with a negative peak in April ($18.5 per barrel) and a subsequent phase of progressive recovery, albeit at historically low levels. The price of Brent (world reference for the oil market, ed.), which averaged $64.3 per barrel in 2019, is expected to stand at $41 per barrel in 2021.
The European Commission's recent autumn forecasts show a sharp drop in GDP for the euro area this year (-7.8%), while a rebound is expected for 2021 (+4.2%), which will still be conditioned by the effects of the spread of the virus and the related containment measures. The recovery in production and consumption rates therefore appears to be linked to the time needed for the spread of the vaccine and the implementation of actions linked to the Recovery and Resilience Facility Program.
Forecast for Italy
In the third quarter of the year, Italian GDP, like that of the main European countries, recorded a marked recovery (+15,9% compared to the previous quarter), which affected all the main economic sectors. The rebound in value added compared to the previous three months was particularly strong in industry in the strict sense of the term (+30,4%) and in construction (+45,9%), with largely positive results also in commerce, transport, accommodation and catering (+25,6%). The improvement in the pace of production did not, however, allow the recovery of pre-crisis levels. The heterogeneity of sector trends, partly linked to social containment measures and the initial impact of government measures, continued in the final months of the year. In November, the manufacturing business confidence index showed a marked deterioration (about 10 points lower than in October), linked to the incisive change in expectations on orders, production and the economy. The information available to date (December 2020, ed.) for the fourth quarter indicates a cyclical decline in GDP and a recovery in production rates from the early months of 2021, as a result of the gradual release of containment measures. For the year that has just begun, GDP is expected to increase by 4%, supported mainly by the contribution of domestic demand net of inventories (by 3.8 percentage points) and net foreign demand (by 0.3 percentage points).
Restart of investments difficult
The fall in production in all European countries led to a sharp decline in investments. In Italy, the strong growth recorded in the third quarter by investments (+31.3%), driven by the marked recovery of those in the construction sector (+45.1%), did not, however, offset the losses suffered in previous months. The process of capital accumulation in the first three quarters of 2020 recorded a sharp contraction compared to the same period in 2019 (-9.8%), with a more pronounced fall in plant, machinery and armaments (-14.5%) than in construction (-9.8%), while investment in intellectual property products (research and development and software) appeared less affected by the evolution of the economic cycle (+0.6%). The increase in uncertainty and negative future expectations on production levels forced companies to revise their spending plans in the presence of a low degree of plant utilization (68.4% the average of the second and third quarter of 2020, down from 77% in 2019). Financing difficulties, although mitigated by government measures, constituted a further brake on investment decisions. In the coming months, the recovery of investments by businesses appears to be conditioned by the choices of the Government's measures: a decisive support to both private and public investments is expected from the definition of the choices related to the Recovery and Resilience Facility Program. In this context, 2020 is expected to close with a reduction in gross fixed investments (-10.1), followed by a recovery this year (+6.2%).
