ExpertEye European Automotive Report Q3 2016 | Page 20

Italy – Banking crisis and a referendum looming

.
Economic Forecasts

The Italian banking crisis is continuing to spiral out of control due to a

2015 2016 2017 2018

reported £270 billion of non-performing loans (NPLs). Shares in Italy's third-

GDP growth (%. yoy)

0.7

0.7

0.9

1.0

largest bank by assets, Banca Monte dei Paschi di Siena (MPS), have

Inflation (%. yoy)

0.1

0.0

1.2

1.4

Unemployment (%)

11.9

11.5

11.4

11.3

Public budget balance (% of GDP)

(2.6)

(2.4)

(2.4)

(2.5)

The stock sale is expected to take place within days of the Italian

Gross public debt (% of GDP)

132.3

133.0

133.1

133.1

constitutional reform referendum which Prime Minister Matteo Renzi has said

Current account balance (% of GDP)

1.6

2.8

2.5

2.1

plummeted as a £4.2 billion cash call has been approved by shareholders.

would cause him to resign if the reforms get rejected. Should that happen
there is fear that the populist backlash seen with Brexit and Trump could put

RV Index: 36 months / 90,000 kms
120

Beppe Grillo’s 5 Star Movement in power resulting in a potential withdrawal
of Italy from the EU and euro.

115

Looking at the economy overall and the manufacturing slow down, the rate of

110

growth seen in the first quarter and Italy’s 2016 GDP is now forecast to rise at

105

increase slightly due to the crisis, larger firms are able to exploit the
improvement in overall Europ ean market funding supported by the ECB.
Unemployment continues to fall but only modestly as the government
incentives on social contributions come to an end this year.
However the latest fiscal plan presented by the Italian government has
removed the threatened increase in VAT from 22% to 24% in 2017. The threat
of this VAT rise has been a boost to vehicle sales as sales have soared thanks

Italy

100

95
90
2010 01
2010 05
2010 09
2011 01
2011 05
2011 09
2012 01
2012 05
2012 09
2013 01
2013 05
2013 09
2014 01
2014 05
2014 09
2015 01
2015 05
2015 09
2016 01
2016 05
2016 09

only the same rate as 2015. Whilst domestic bank lending is likely to only

Europe Average

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

to buyers trying to beat the rise. With this threat now gone new vehicle sales
European Automotive Report - 2016 Quarter 3

19