ExpertEye European Automotive Report Q2 2016 | Page 20

Italy – Banking Crisis Looming
Whilst the economy accelerated slightly in the first quarter, the latest

data for Q2 suggests that growth
rowth remained weak. The UK’s vote to
leave the EU prompted significant tension in the Italian equity

markets, hitting Italy’s most vulnerable banks especially hard and
adding to an already serious banking crisis. Italy's third-largest
third
bank by

assets, Banca
a Monte dei Paschi di Siena (BMPS), is in the eye of the

storm due to its large stock of non-performing
performing loans (NPLs). Prime

Minister Matteo Renzi is trying to organize a government rescue of
BMPS to avoid imposing losses on bank depositors and junior

bondholders,
olders, which could fuel political discontent ahead of the

.
Economic Forecasts - Italy

GDP growth (%, yoy)
Unemployment (%)

Public budget balance (% of GDP)
Gross public debt (% of GDP)

Current account balance (% of GDP)

October constitutional referendum.

115

The results of the 29th July stress tests on several banks within the EU

110

will shed light on the Italian banks’ financial needs and might trigger

public intervention
on in support of a bank recapitalization, risking a

100

demand pose downside risks to Italy’s already weak growth prospects.

95

The composite confidence index rose 2.1 points to 103.3 mainly driven

by companies working in the services markets who are expecting an
increase in the level of orders and also rising expectations
ex
for the
European Automotive Report - 2016 Quarter 2

2017

0.2

0.1

0.2

1.4

12.7

(3.0)

132.5
1.8

0.8

11.9

(2.6)

132.7
2.2

1.1

11.4

(2.4)

132.7
2.4

1.3

11.2

(1.9)

131.8
2.3

RV Index: 36 months / 90,000 kms
Average

Italy

90

2010 01
2010 04
2010 07
2010 10
2011 01
2011 04
2011 07
2011 10
2012 01
2012 04
2012 07
2012 10
2013 01
2013 04
2013 07
2013 10
2014 01
2014 04
2014 07
2014 10
2015 01
2015 04
2015 07
2015 10
2016 01
2016 04

It is expected the Italian economy to expand by just 0.8% this year.

2016

105

possible clash with the European authorities. The re-emergence
re
of
tensions in the financial markets and the ongoing weakness in global

2015

(0.3)

Inflation (%, yoy)

120

2014

Sources: European Commission – Economic Forecasts Experteye
Expertey AG - RV Index
Bowkett Auto Consulting Ltd - Forecast vehicle sales

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