Country Economic Forecast Italy | Feb. 2020

Oxford Economics ha pubblicato l’ultimo Country Economic Forecast per l’Italia contenente le ultime stime macroeconomiche – a seguito del calo del PIL nel quarto trimestre e tenendo in considerazione l'impatto del coronavirus non si prevede nessuna crescita per l’economia Italiana nel 2020.

  • Italian GDP contracted in Q4 last year. According to the flash estimate, GDP was down 0.3% quarter-on-quarter, the worst performance since early 2013, with domestic demand responsible for the drag on growth. While we envisage some, albeit small, rebound in Q1, likely driven by construction and stockbuilding, the much weaker end to 2019 and the negative impact of the coronavirus outbreak has prompted us to cut our 2020 growth forecast for Italy. We now see zero growth this year (down from 0.3% last month), after just 0.2% in 2019. The ‘big picture’ remains of a country stuck in stagnation.
  • While we had expected the Italian economy to continue stagnating, the Q4 outcome was much more negative than expected and likely driven by falling industrial and construction output in Q4, with inventories also pulling down growth (while net exports were positive). Recent data, such as the PMIs and the confidence indicators from ISTAT, do not point to a meaningful improvement in the short term. We expect some rebound in Q1 this year but the risks to our forecast remain on the downside.
  • Although the unemployment rate was unchanged at 9.8% in December, the number of people employed fell sharply over the month. We think employment growth will be very sluggish over the next few quarters, in line with subdued employment intentions, and we expect the unemployment rate will stabilise at just below 10%. Meanwhile, CPI inflation is likely to remain very low in 2020, under 1% for a second year in a row, and this should help – at the margin – developments in real incomes.
  • The recent results of regional elections most likely reduce the risk of a swift end to the current government coalition but we continue to think that this cabinet is unlikely to be able to survive until the end of its mandate (2023). The markets remain too complacent about the volatile political situation and the weakening fiscal metrics.