GDP and recession, tourism does not replace industry: that’s why – Corriere.it

THEThe path of the Italian GDP is linked to the performance of services, manufacturing in fact marks the pace and gives up the baton of the relay. But what do we know about the made in Italy service economy, where they can take us and at the same time how serious the risks of recession are inextricably linked to the change of pace of industry. Prometeia will present the Quarterly Forecast Report in a public webinar on July 7, so we asked Lorenzo Forni, general secretary of Prometeia Associazione. As in all advanced countries, the private services sector also accounts for the majority of GDP in Italy, around 70 per cent. Based on the data for the first quarter of 2023, the wholesale and retail trade segment which also includes hospitality – the so-called Horeca – accounts for 35% of market services, information and communication technology 7%, finance 8%, real estate 24% and professional services 18%.

But unlike the other partner countries, our services have the handicap of low productivity.
We are talking about activities that require a lot of occupation unlike manufacturing which can automate some phases of the work. true, Italian productivity is not high and depends on the specific weight of catering and tourism which do not have a high added value. It is clear that if you have more financial services characterized by a suitable added value, productivity will benefit thanks to the higher margins. Not our case.

For the tourism component, today it acts as a relay of GDP with respect to industry.
I’m not so convinced. The thrust of services came in recent quarters from the 110% incentives linked to the energy efficiency of homes. An activity that has driven the professional activities of technical experts, architects and other similar figures. it was an incredible boom whose tail we now see. The reception, on the other hand, is flat, it doesn’t work anymore. Now we will have to see the summer. But so far we have mostly seen a recovery from Covid levels, decidedly intense in the summer of 2022. Talking about touristification frankly seems to me an exaggeration. The weight of Horeca services in Italy is high, but it’s not exploding. It is true that the Americans and Chinese are coming back to us, but on the other hand the spending of the Italians is not so high. Let’s not forget that in tourism there is a tight competition between country-systems, not an easy market.

The growth of services is good for GDP, but together it overheats the economy and produces a share of inflation.
That may be true, perhaps, in the rental market. In art cities, the massive presence of Airbnb leads to an increase and at the same time reduces the offer available to families. Unfortunately we do not have detailed data on this phenomenon, but we can say that in this particular segment we find signs of overheating in prices. I would be more cautious to say that overall services are a driver of inflation.

So would it be useful to regulate Airbnb’s business?
Having said that attracting tourists serves to keep economic activities going and therefore their arrival should not be discouraged, I would say that some form of regulation of short-term rentals is necessary. It is also about seeing the differences between city and city. I don’t have the solution, if I were a mayor I would like to understand more. Knowing if there is a reasonable demand for homes or if there is an excess, whether to limit the opening of new Airbnbs or even reduce them.

Meanwhile, the primary cause of the decline in industry lies in the slowdown in world trade.
Surely the services are domestic and are less affected. We are faced with a simultaneous slowdown of Europe and of the States and of a China that travels at a slower pace than in the past. But the idea of ​​a services-manufacturing relay seems to me too weak and, I repeat, so far linked to the construction boom we have been talking about.

Our exports are also suffering. Yet just this year they exceeded the symbolic 50% turnover of manufacturing and it seemed that we were becoming an export-led economy.
We come from a phase in which exports have performed very well, our products have conquered some new markets and we have done better than France and Germany. But we are a large country in which more than two-thirds of the GDP comes from services and therefore we will never be an export-led economy. another exaggeration.

In the manufacturing field, the sectors that had suffered the most under Covid such as furniture, household appliances, IT suffer the most. What about investments instead?
Of course, those are the weakest sectors and let’s not forget that furnishings also benefited from the indirect effect of the home bonus. Investments begin to decline, even in construction. It would be interesting to better understand whether investments related to the ecological and digital transitions are slowing down. I don’t have detailed data, but from anecdotal data I would say that they are stagnating.

Certainly investments are held back by the increase in taxesthe.
There are signs of a decrease in credit from entrepreneurs, but at the moment it seems almost physiological to me, in line with the global slowdown. I see no comparison to other seasons like 2009 or 2012, liquidity is still plentiful. The banks are cutting back on credit, that’s all.

But can this situation get worse after the summer?
I don’t see financial fragility causing credit to take a bad turn, the situation is not tense at the moment and I don’t see a credit crunch looming.

The increase in the cost of mortgages has some consequences.
Old mortgages are mostly fixed rate, new ones are actually more expensive and this increase will have the effect of reducing real estate transactions. It will be more difficult to buy and sell and it can be assumed that we will see prices fall. I don’t know what size.

How do you explain the contradiction of an Istat confidence index that rises among consumers and falls among businesses?
Consumer confidence is a phenomenon that has become more complicated with the pandemic. With Covid and the war in Ukraine it has lost its link with consumption and it is hard to read what is behind it. While on the business side a more aware, more informed opinion emerges.

Among the manufacturing sectors, the automotive sector has reared its head. Will it last?
a rebound effect, an adjustment after the blockage of deliveries due to the lack of components. On the nose, there’s no reason to think it lasts long.

a season in which competition in general seems to count for little.
Changing the structure of a market takes a long time. I do not believe that more competition can be introduced with an immediate effect on prices.

With the manufacturing crisis linked to international factors, are industrial policies blunt weapons?
In Italy after the choices of Industry 4.0, which at the moment have a very limited impact, there has not been a real industrial policy. Now these choices are being invoked again especially after the US change of approach with the launch of the IRA program (Inflation Reduction Act). Like Prometeia, we are organizing a webinar on 13 July to understand how the EU is reviewing the state aid policy to give new impetus to an industrial policy aimed at least at strategic supply chains.

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