Bank of Italy, “the GDP stopped in the spring”. Inflation down but only from 2024. Public debt, new record

A hot phase is confirmed for the Italian public finances, grappling moreover with the delays in the disbursements of the installments of the Pnrr which could have an impact on the need to resort to the market.

In the meantime, give the data Bank of Italy updated to last May, it emerges that the public administration debt has “increased by 4.8 billion compared to the previous month, amounting to 2,816.7 billion”.

An increase that via Nazionale “substantially” leads back to central administrations (4.6 billion). “The general government borrowing requirement (€15.8 billion) and the effect of issue and redemption spreads and premiums, the revaluation of inflation-linked securities and changes in exchange rates (€1.7 billion) – continues the Bank of Italy – have more than compensated the reduction of Treasury liquidity (12.7 billion, to 27.6 billion)“.

GDP stopped in the spring

Furthermore, the deterioration of the economic situation also emerges from the new bulletin in via Nazionale. The economists of Palazzo Koch note that Italy’s economic growth, “after the rebound in the first quarter”, was “interrupted”, and GDP “remained almost unchanged in the spring”. Updating last month’s forecasts, Bank of Italy maintains growth this year at 1.3%, while in 2024 and 2025 it is limited to 0.9 and 1% respectively.

On the prices chapter, to see a “sharp slowdown” in inflation we have to wait for 2024: “Inflation – reads the Bulletin – it would drop to 6% on average this year, and would drop to 2.3% in 2024 and 2.0% in 2025″. At the basis of the decline, “the direct and indirect effects of the fall in the prices of energy raw materials”. According to the economists of via Nazionale, in Italy “the risks of a wage-price spiral remain contained“.

Core inflation, expected at an average of 4.5 per cent for the current year, would reach 2.0 per cent at the end of the three-year forecast”.

Among the reliefs of Palazzo Koch, too the return of foreign investors on BTPs. “After a prolonged period in which sales were higher than purchases – we read – foreign investors have shown renewed interest in Italian securities. In the first four months of the year, foreign portfolio investments amounted to 16.4 billion, almost entirely in bonds, of which 10.4 billion in public securities”. The easing of tensions in the banking sector “favored a drop in the volatility implicit in derivative contracts on the Italian ten-year government bond, which returned to values ​​slightly higher than those prevailing before the start of the monetary policy tightening cycle in December 2021 “. The decline in the Btp-Bund spread, note the national economists, was influenced by the “very positive” outcome of the June auctions “which helped to alleviate fears about the ability to refinance the public debt”.