How is GDP going (and how it will go) in Italy. Report
The comment by Paolo Mameli, senior economist of Intesa Sanpaolo, on the GDP figure in Italy in the second half of 2022
In the 2nd quarter of 2022, the Italian GDP jumped by 1% qoq, after the 0.1% qoq recorded at the beginning of the year . The figure is much stronger than both consensus expectations (0.3% qoq) and our more optimistic forecast (0.4%). The annual change slowed to 4.6% from 6.2% previously (consensus: 3.7%, our forecast: 3.9%). GDP has now for the first time more than recovered the pre-pandemic level (+ 1% compared to the end of 2019). The “acquired” growth for 2022 (in the event of stagnation in each of the two remaining quarters of the year) is now 3.4% (previously it was estimated at 2.6%).
The breakdown by components will be disseminated by Istat on the occasion of the second estimate on 1 September next. However, the statistical agency anticipated that the growth came from both industry and services (while the added value fell in agriculture): in fact, based on industrial production data, it was reasonable to expect a positive contribution from industry in the strict sense, mirroring the negative one seen at the beginning of the year.
On the demand side, as in the last two quarters, there was a positive contribution from the domestic component (gross of inventories), while foreign trade held back GDP , as imports continue to grow faster than exports (not in nominal terms only). We think that domestic demand may have been driven above all by consumption (thanks to the rebound in spending for services after the wave of Covid at the beginning of the year), but investments should also have maintained a positive pace.
In summary, the 2nd quarter GDP figure was stronger than any rosiest forecast , and signals that our estimate of 3% of 2022 GDP (already above the consensus) could be outdated. For the current quarter, we expect a slowdown, but with GDP probably still in positive territory, also thanks to the recovery in tourist flows.
In our opinion, the large positive surprise of the spring quarter is mainly due to the recovery of personal mobility as a result of the lower health risk , given that the quarter is confronted with the first part of the year in which Italy saw the peak of 'winter wave of Covid (which weighed on both industry and services).
Looking ahead, we believe that the greatest risks to the cycle may materialize between Q4 2022 and Q1 2023, due to the delayed impact of the inflationary shock as well as a possible gas rationing (in the season when consumption is highest). . Overall, we believe there are upside risks to our 3% forecast for 2022 GDP, and vice versa downside risks to our 1.6% estimate for next year.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/come-va-e-come-andra-il-pil-in-italia-report/ on Fri, 29 Jul 2022 11:51:34 +0000.