at the end of the year comes the recession in Europe, including Italy- Corriere.it

FROM OUR CORRESPONDENT
BRUSSELS – The war unleashed by Russia in Ukraine is strongly felt on the autumn economic forecasts of the EU Commission, which substantially revised the July estimates. The euro area and most of the member states – writes the community executive – they will find themselves in a recession in the last quarter of the year. The Commission has revised its growth expectations for 2022 upwards but has cut its estimates for 2023. We are approaching the end of a year in which Russia has once again cast the dark shadow of war on our continent, Economy Commissioner Paolo Gentiloni said, explaining that the surge in energy prices and the Rampant inflation are now taking over and we are facing a very difficult period both from a social and economic point of view but if we Europeans can stay united, we can successfully overcome these difficulties and emerge stronger on the other side. For Gentiloni, prospects are once again surrounded by a ‘exceptional uncertainty. The potential for further economic disruption due to the Russian war is far from exhausted. The greatest threat comes from the negative developments in the gas market and the risk of shortages, especially in the winter of 2023/2024. The commissioner has ruled out at the moment that the return of the Stability Pact, scheduled for 2024, is postponed.

Italy

The Commission has improved the Italian GDP growth estimate this year to 3.8% and reduced that for next year to 0.3% (here, all the tables), while in 2024 it should reach 1, 1%. In the summer it forecasted 2.9% for this year and 0.9% for next year. The Italian economy should therefore enter a period of contraction, with a tangible recovery not expected before the second half of 2023 but not in recession. The projections – the Commission specifies – are based on the assumption of unchanged policies, given that the national elections at the end of September and the subsequent formation of a new government delayed the adoption of a draft budget for 2023. The current government indicates a trend towards current legislation of 3.7% for this year, 0.3% for next year, 1.8% in 2024. According to Brussels, the inflation rate should reach 8.7%, in 2023 to 6.6% and in 2024 to 2.3%. Italy’s debt is estimated at 144.6% of GDP for 2022, 143.6% for next year and 142.6% in 2024.

EU and Eurozone

The expectation that the GDP in the Eurozone will stand at + 3.2% this year (against the + 2.6% indicated in July), to slow down to + 0.3% in 2023 (it was + 1.4% in previous estimates). The forecast for 2024 is now 1.5% GDP growth. In the EU27, the estimated growth of 3.3% for this year, 0.3% for the next and 1.6% for 2024. The energy crisis is eroding the purchasing power of households and weighing on production, the Commission notes that it expects inflation to reach 8.5% in 2022 in the Eurozone and 9.3% in the EU, to then decrease to 6.1% in 2023 in the Eurozone and to 7% in the EU. The upward revision reflects significantly higher wholesale gas and electricity prices, which exert pressure on retail energy prices and most goods and services in the consumer basket. The estimate communicated in July was an inflation of 7.6% in 2022 in the Eurozone and 8.3% in the EU, therefore expected at 4% in the euro area and 4.6% in the EU.

The others

This year in the euro area, only Estonia will be in recession with a contraction in GDP of 0.1%. Germany will grow by 1.6%, France by 2.6%, Spain by 4.5%. Next year Germany and Latvia will be in negative territory: the former -0.6%, the latter -0.3%. In 2024, all countries will have positive growth, with Italy falling back into the tail sections for growth rate with an increase in GDP of 1.1% like Austria. Germany would grow by 1.4%, France by 1.5%, Spain by 2%.

In recession

The Commission certifies the recession at the end of the year for the Eurozone and for most of the Member States including Italy, France and Germany, caused by the high uncertainty, the high pressures on energy prices, the erosion of power household purchases, a weaker external environment and more restrictive financing conditions. In the last quarter of this year, growth in the euro area will be negative, -0.5%. It will remain negative also in the first quarter of 2023 (-0.1%) to rise again in the second quarter (+ 0.2%). In the fourth quarter of this year in the euro area, only Slovakia, among the countries for which Brussels indicates the quarterly estimates, will grow positively (+ 0.4%) while Latvia will stall (0%). In the last quarter in Italy growth will drop to -0.3%, in Germany to -0.9% (the worst figure in the area), in France to -0.2%, in Spain to -0.3% . In the first quarter of 2023 Italy will remain negative (-0.3%, rising in the second quarter to + 0.1%), Germany (-0.3%), France (-0.1%) while Spain will be at 0. Below zero also Austria, Portugal, Slovakia, Finland.