in Italy growth of +1.2%, but the delays of the Pnrr can slow down the GDP- Corriere.it

in Italy growth of +1.2%, but the delays of the Pnrr can slow down the GDP- Corriere.it


The world economy has started to improve, but the recovery will be weak, according to the latest Economic Outlook of the OECD which forecasts a moderation in world growth from 3.3% in 2022 to 2.7% in 2023 (last March estimate was 2.6%), followed by a recovery to 2.9% in 2024. Italy, with growth adjusted upwards to +1.2% this year (it will slow down to +1% in 2024 ), does better than the Eurozone average (+0.9%). But the OECD warns that delays in implementing the Pnrr "could reduce GDP growth". Furthermore, structural reforms will be a key element in supporting growth and reducing the public debt-to-GDP ratio.

A fragile recovery

"Global economic developments have started to improve, but the recovery remains fragile," says the OECD. Global GDP growth to 2.7% in 2023 will reach 2.9% in 2024, well below the 3.3% target reached last year. "The global economy is turning a corner, but faces a long and winding road to achieving strong and sustainable growth," writes wing chief economist Clare Lombardelli. The prospects still remain "significantly uncertain" and among the reasons of greatest concern are inflation and the war in Ukraine.

The risk of rising interest rates

Lower energy prices are helping to reduce headline inflation and ease household balance sheet strains, business and consumer confidence is recovering, and China's full reopening ahead of schedule has provided a boost to global activity , reads the OECD report. At the same time, core inflation is proving to be persistent, reflecting higher profits in some sectors and still high cost pressures in resilient labor markets. The impact of higher interest rates around the world is being felt more and more, particularly in the real estate sector and financial markets. Signs of stress have started appearing in some segments of the financial market as investors reassess risks and credit conditions are tightening. Furthermore, "the full effects of the tightening of monetary policies", which the OECD does not yet see finished, will be seen "only by the end of the year or in the first part of 2024".

United States in slow motion

Notably, US GDP growth is forecast at 1.6% in 2023, before slowing to 1% in 2024 in response to tight monetary and financial conditions. In the euro area, declining global inflation will help stimulate real incomes and boost GDP growth from 0.9% in 2023 to 1.5% in 2024. China is expected to experience a sharp increase in GDP growth in 2023 (with 5.4%) and in 2024 (with 5.1%), thanks to the abolition of the government's zero-Covid policy. But the latest May data on the trade balance, with the sharp drop in exports and imports, suggest that the situation remains fragile and uncertain.

Italy to the test of the Pnrr

As for Italy, growth aside, the OECD estimates a decline in the debt-to-GDP ratio to 140.7% in 2023, from 144.3% in 2022 and to 139.4% in 2024. The ratio between the budget deficit and GDP is expected at 4.1% this year, compared to 8% last year, and 3.2% in 2024. While unemployment will remain stable at 8.1% over the two-year period. To see a sustained drop in inflation, estimated at 6.4% for this year (in May it was 7.6% compared to a Euro average of 6.9%), we will have to wait for 2024, when the prices should shrink to 3%.

"Italy's slightly restrictive fiscal stance" "seems broadly appropriate and continued consolidation will be needed in the coming years to put the debt-to-GDP ratio problem on a more sustainable path," writes the OECD, noting however that the savings accumulated by households remain "high" and this could favor "a faster rebound in domestic demand than currently expected".

On the contrary, "delays in the implementation of the national recovery and resilience plan (Pnrr) could reduce GDP growth". Instead, "the full implementation" of the ambitious public investment and structural reform plans envisaged by the Pnrr could lead to a "lasting increase in Italy's GDP", with the advantage of exerting further pressure on debt reduction. Therefore the Organization of Paris suggests to «replace unfeasible projects.

The German case

In Europe, Italy's "modest" growth compares with a Germany that will stand still in 2023 and increase by 1.3% next year According to the OECD, "high inflation is eroding real incomes and savings, the which is dampening private consumption” in Germany. However, German exports are recovering and investments will continue to increase, despite the increase in interest rates implemented by the European Central Bank (ECB). For the OECD, the federal government would be making a mistake if it responded to the stagnation with an expansionary fiscal policy. In fact, the increase in public spending must be avoided in order to curb inflation. Especially since, according to the OECD, the German state will invest more and provide tax incentives for "green" investments.

In France, however, GDP growth is expected at 0.8% this year and 1.3% in 2024, in Spain at 2.1% and 1.9% respectively. IN Portugal at 2.5% and 1.5%. In Greece at 2.2% and 1.9%.

The women's recommendation

The Outlook includes a special chapter dedicated to women's economic empowerment, with policy recommendations including expanding flexible working arrangements, addressing tax and benefit disincentives and improving access to childcare services. The report emphasizes that eliminating structural barriers and discrimination to achieve gender equality must be a top priority to promote long-term economic well-being and prosperity.


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