Italy will escape the winds of recession, and will be able to reduce its debt again this year after the drop of more than four points of GDP in 2021. As long as the “big risks” linked to war and energy prices do not materialize, an unknown factor for the world economy.
Daniele Franco is making his debut at the World Economic Forum as Economy Minister. And there are many questions that rained down on him in the two panels he participated in in Davos, in an economic phase dominated by the uncertainties of the pandemic first, the war and the violent energy increases later. The minister prefers to speak of “resilience” and but “” businesses and households that resist “.” The forecasts, also based on data from the European Commission, indicate that we will not have a recession, even if we see risks linked to developments in Eastern Europe and to energy prices, which if they remain very high do not help “.
Of course, the Italian economy faces “big risks” from energy prices and the developments of the war in Ukraine like other economies. But in the absence of major shocks “we expect to continue growing this year, albeit at a significantly lower rate than last year”. If the situation worsens, on gas, on supplies, “the prospects will be worse, as for anyone else”.
The speech, in one of the two Davos panels, inevitably focuses on Italy’s debt. During wars and crises such as that triggered by energy prices, Franco recalls, it is more difficult to reduce it. But thanks to conservative estimates in the Def, and to the resilience of growth (expected around 3% with a 2.2% inherited from the drag from 2021), also in 2022 there will be “a similar result” to the decline in debt last year. more than four points of GDP.
The average cost of debt will continue to fall despite interest rates having turned around, reassures Franco. An additional challenge to the decline in debt is given by the support of the European Central Bank – which financed the deficits of 2020 and 2021 – which from July will be less generous: the ECB at the beginning of that month will stop the ‘net’ purchases of debt, and then start raising rates. In this regard, the president Christine Lagarde, today, was portrayed in the lounges of the Davos Forum next to the Dutch councilor Klaas Knot, one of the hawks with whom some sparks had flown in recent days for the prudent choice to raise rates by 25 basis points in July, and probably also in September. A ‘reconciliation’ rebounded on twitter and re-posted by Knot himself, as if to give a signal of unity in the ECB Council: Knot now “fully” supports Lagarde’s prudent approach. Franco certainly supports him: the Italian minister knows well, and explicitly says to Davos, that the ECB “will have to balance the need to bring inflation under control with the need to avoid another recession in Europe, it’s a difficult balance. “. After all, “we all know that rates will rise, the point is the speed at which they rise”. According to Franco, the fact that much of the inflation in Europe is from supply, linked to energy prices, “I believe that first of all it should make us focus on energy prices, and then it should be considered in the speed with which rates are raised”.
Words that refer to European initiatives to contain the heavy impact on the growth of gas prices. And, in fact, they distance American scenarios, where the Fed is proceeding with ‘jumbo’ rate hikes from half a point at a time, thanks to more robust growth given the physical distance from Ukraine, and to inflation more linked to consumption and investments than to Putin’s blackmail.
Source: Ansa
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