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Wednesday, February 1, 2023

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Bank of Italy: more wealth gaps, middle class hit

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The ECB raises rates by half a point, there is an anti-spread shield (ANSA)

The Bank of Italy reviews the methodology of the survey on Italian households, covering high incomes more effectively, and thus increasing the wealth gaps. The middle class, due to the decline in the value of houses, is penalized and the poorest families, on the other hand, slightly increase their condition. In the 2016-2020 period (at the threshold of Covid), average net wealth increased by 1.7% mainly thanks to the financial component, thanks to the growth in savings and the increase in value. The Gini index (which measures inequalities) of household net wealth increased by 3 points. Income gaps remained unchanged over the 2016-2020 period while the share of low-income individuals, those whose equivalent income is less than 60% of the median, decreased. The average family income was boosted by dependent work, and by the support measures introduced between 2016 and 2019 and by the extraordinary ones adopted in 2020 during the pandemic. This is also why the increase was more sustained in the income of the lower range. The decline in house prices, which has lasted for several years, has cut the wealth of the middle classes in Italy in the period 2016-2020, while the poorest families have improved their conditions, sometimes borrowing to buy a house. 82% of the gross assets of total households are made up of real assets such as real estate (-6.9% their value between 2016 and 2020), businesses or valuables. The annual income of families has advanced in recent years but still remains far from pre-2006 levels, therefore before the recessions that hit our country. As can be seen from the survey, in 2020 the annual family income, in real terms and net of income taxes and social contributions, was about 3 per cent higher than that found in the 2016 survey but still lower. more than 12 percent compared to that recorded in 2006, before the global financial crisis. External conditions for the Russian economy remain “challenging and significantly limit economic activity” even though “currently operational indicators show that the decline in economic activity is slower than the Bank of Russia expected in June” with trends in the various geographical areas and in the various sectors that “remain largely contrasting”. In its baseline scenario, the note announcing a rate cut reads, the Bank of Russia expects a 4-6% GDP decline in 2022, followed by a 4 to 1% reduction in 2023 and a growth of 1.5-2.5% in 2024.

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Source: Ansa

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