GDP Italy + 6.1% in 2021 (CSC) – Assolombarda

GDP Italy + 6.1% in 2021 (CSC) – Assolombarda
GDP Italy + 6.1% in 2021 (CSC) – Assolombarda

The forecasts 2021-2022 of the CSC

According to the CSC, iItalian GDP in 2021 will grow stronger than expected: +6,1% (2 points more than the April estimates), in line with the growth forecasts contained in the NaDEF (+ 6%).
This robust restart, equal to more than + 10% in the two-year period 2021-2022, would bring Italy back above pre-pandemic levels in the first half of 2022, ahead of initial expectations.
The CSC scenario includes, for 2021 and 2022, the European resources that will be used under the PNRR.

The Italian restart is characterized in 2021-2022 by two “passing of the torch”:
1) i consumption they are gradually taking over from exports as a driving force for the rise, placing themselves alongside investments;
2) i services they are becoming more dynamic than the industry (which was already broken down between the second half of 2020 and the beginning of 2021).
These two developments have a minimum common denominator: since spring 2021 there has been a recovery in household spending (after being blocked and partly diverted to durable consumption in the lockdown), especially in services.

Investments remain the main engine of the Italian recovery: in 2022 they will be at a much higher level than the pre-crisis (+ 17.7% compared to 2019). So far the main contribution has come from investments in construction, while investments in plant, machinery and means of transport are still lower than in the pre-pandemic.

The export of goods will return above the pre-crisis levels already in 2021, thanks to a world trade that will register a growth of + 10.5% in 2021 (despite the slowdown in the middle of the year); while the export of services will restart only in 2022, due to the persistent weakness of long-distance tourism and travel for work.

In the coming months, the restart could be partly held back by negative supply factors, such as the increase in raw materials and the difficulty in finding some materials. The signals come from industrial production and from the confidence of manufacturing companies which showed a slight attenuation in activity.

The dynamics of inflation in Italy

The increases concern all the main Western economies, but in 2021 the dynamics of consumer prices showed deep gaps. Inflation, in fact, is higher in the USA and in some Eurozone countries, while in Italy it has risen only in recent months due to the rise in oil. In 2022, the thrust could diminish, but in a differentiated way: only partially in the USA, to a greater extent in Europe and, above all, in Italy.
In Italy, the containment of consumer prices is mainly due to the absorption of price increases by the supply chains. As Chart C shows, in the face of the jump in commodity prices (+ 27.8% non-energy in euro from October 2020 to July 2021), in Italy the response to the prices at the factory gate was very heterogeneous: some sectors further upstream, producers of intermediate goods managed to raise their price lists (+ 11.1%) although they were unable to fully transfer the increases in input prices. On the other hand, those further downstream, closer to domestic final demand, which has just begun to rise, were unable to go beyond a moderate increase (+ 2.1%). Finally, the price dynamics in the consumption phase are just + 0.4%.

The complete report is available at the following link.

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