Goodbye growth: in the second quarter, GDP progress is zeroed

ROME. In the second quarter of this year, the growth of national wealth came to a halt, the Bank of Italy certifies. Which also yesterday recorded a new absolute record for Italian public debt which in May reached 2,816.7 billion euros, 59.8 more than the end of 2022. In practice, according to estimates, it is 47,862 euros per Italian , 107,483 per family. But if these data, according to Via Nazionale, do not compromise “the downward trend of debt relative to GDP”, those relating to the real economy are certainly cause for concern.

The slowdown in spring, according to the latest Forecast Bulletin released yesterday on via Nazionale, is essentially due to the decrease in manufacturing production, held back in particular by the weakening of the global industrial cycle (which in turn suffers from high inflation and restrictive financing linked to generalized increases in interest rates), and activities in the construction sector. “Waiting for the stimulus deriving from the Pnrr to fully unfold”, in fact, activity in the construction sector would have decreased “affected by the gradual attenuation of the effects of the tax incentives linked to the 110% superbonus”.

On the demand side, GDP would still be supported by consumption, above all by services starting from recreational tourism. And fortunately, already in the first quarter of this year we had achieved a good +1.3% growth, a level that the Bank of Italy confirms for the current year, while revising downwards the estimates for 2024, when the GDP will rise by just 0.9% (instead of the 1.1 expected by the government), and those of 2025 (+1%).

In short, after the boom of 2021-2022 we are starting to decelerate, returning to growth below the percentage point. It is the zero point curse that has haunted us for decades now. The blame for this slowdown can essentially be identified in one factor: the weakening of the dynamics of private investment, which is expected to increase in the second half of this year and in 2024 due to the increase in interest rates and the tightening of credit access. The impact on GDP could be even more significant if it weren’t offset by the progressive decline in inflation and the increased public investment programs in the Pnrr, which (understood) the Bank of Italy takes for granted will be grounded. Another unknown to be verified.

As for consumer prices, inflation fell further in the spring (although remaining at very high levels), thanks to the marked decrease in the energy component which was reflected in food goods, non-energy industrial goods and in June also partly on services. This year, the price increase would be 6% and then fall to 2.3% in 2024 and 2% in 2025.

In this phase the cost of credit increases and consequently bank loans are reduced and the incidence of the flow of loans with heavy payment delays also increases.

On the other hand, there are positive data on employment which continues to grow and has exceeded pre-pandemic values. Enough to revive household consumption which returned to expansion in the first quarter of this year (+0.5% compared to the previous period), thanks to the improvement in confidence, the good performance of the labor market and a stabilization of the power of ‘household purchase due to the payment of large arrears due to delays in renewals in the public sector. The increase in employment, together with expansive interventions on the tax and transfer system, led to an increase in household disposable income. The propensity to save, which after reaching particularly high peaks at the beginning of 2021 had continued to decline, returned to rise, reaching the values ​​of the end of 2019 (7.6%).

As for consumption, however, the new alarm from Confcommercio is still yesterday, according to which the level of so-called compulsory expenses (electricity, gas, fuel, housing, health care and insurance), although decreasing, remains high (41.5% ) and runs the risk of producing a structural reduction in consumption, slowing down growth even more than has already occurred.