MILAN – The Italian economy is sending new signs of weakness. “The GDP remained stagnant in the third quarter, and the indicators say that at the beginning of the fourth, activity in services is in slight decline, as in industry”, underlines the Confindustria Study Center in its flash economic situation. if inflation in Italy has finally returned below 2.0%, rates are at their highest and blocking the credit channel, slowing down consumption and investments, while exports help little. With the ongoing wars, uncertainty rises, but not the cost of energy (so far), which is however much higher than before the energy crisis”, writes the CSC.
Italian inflation – Confindustria notes – fell sharply in October to +1.7% per year (from +5.3% in September), thanks to a very favorable “base effect” on energy prices, which collapsed to -19, 7% per year (+26.8% in the same month of 2022 due to the gas peak). The core prices of goods and services continue to slow down, but only slowly (+3.7%), as do food prices (+6.3%), thanks to the partial moderation of commodities. These are values not yet fully in line with the +2.0% threshold.
At the beginning of November the Fed kept the US rate stable for the second time (at 5.50%), as did the ECB at the end of October (4.50%). The basic scenario is that rates have reached their maximum, as indicated by futures, which discount the first cuts in 2024.
However, Powell underlined the risk of new increases if US growth does not slow down and inflation remains high (+3.2%); and Lagarde reiterated that there could also be other increases in the Eurozone, in the event of new “shocks” that change the scenario.
The credit situation for Italian businesses is worsening: the cost rose to 5.35% in September, the fall in loans reached -6.7% per year. In fact, in the third quarter, demand continued to decline due to excessively high rates and the offering criteria became more rigid: more and more businesses remained without credit. Good news comes from non-performing loans, stable at 19.3 billion.
In August the expansion of tourism slowed down: spending by foreigners in Italy was +9.5% over 2022, but -1.7% from the peak in July. In September the Rtt index (CSC-TeamSystem) signals a moderate decline in services for the 3rd month in a row, and in October the PMI fell markedly (47.7, from 49.9), indicating a contraction, while business confidence continues to decline. Production remained stagnant in September. The third quarter recorded a slightly positive change (+0.2%), but after four negative quarters: since the beginning of the year it fell by -1.8%.