“ Industrial modernisation in Italy has been happening under the auspices of governmentsupported incentives for the past five years .”
Image : Shutterstock . com .
On 27 July 2022 , the Executive Board of the International Monetary Fund ( IMF ) concluded its Article IV consultation with Italy .
“ The Italian economy rebounded vigorously from the COVID-related drop in output and has avoided economic scarring . Employment and labour force participation have fully recovered , and banks ’ non-performing loans have continued to decline and their capital positions have strengthened ,” it said .
Nevertheless , the economy is now facing major new challenges . The war in Ukraine and COVID-related disruptions to global supply chains have pushed up energy prices and inflation more broadly and intensified shortages of key products , even as global demand is slowing . Ensuring an adequate supply of energy is a priority for the country .
MADE IN ITALY
We analyse the latest manufacturing forecasts and economic factors affecting the Italian market in this report .
IMF forecast for Italy
Growth was projected to moderate sharply and remain subdued owing to the war in Ukraine , monetary policy tightening , continued supply chain disruptions and higher and more persistent inflation . In all , the IMF expected Italy ’ s economy to expand by three per cent in 2022 , mostly on strong carryover from last year , with a further slowdown to around ¾ per cent in 2023 . Annual average inflation is expected to peak in 2022 at 6¾ percent and to moderate gradually thereafter . In subsequent years , as energy prices moderate , growth is forecast to pick up , reinforced by public investment spending under the National Recovery and Resilience Plan ( NRRP ).
“ Uncertainty surrounding the baseline forecast is high , and downside risks could materially affect the outlook , complicating the task of reducing public debt . A further spike in energy prices and / or a rapid tightening of financial conditions could compress growth , and weigh on fiscal consolidation efforts . Difficulties delivering NRRP investments and reforms would reduce support for demand , weaken longer-term productivity enhancements and delay EU financing . Sustained high inflation could erode recent external competitiveness gains . A complete suspension of Russian energy imports in the coming months could reduce output significantly this year and next relative to the baseline ,” cautioned the IMF .
However , its Executive Directors commended the authorities ’ effective pandemic policy response , which delivered a robust and full recovery . They underscored the need for sustained , decisive improvements in fiscal balances . They commended the authorities ’
44 | ismr . net | ISMR November 2022