Italy’s investments to decline by 8.5%, Intesa SanPaolo
Despite the significant easing of tensions on the financial markets in recent weeks, the Italian economy is still on course for a 2.4% market contraction in GDP in 2012, according to Paolo Mameli, economist at Italy’s bank Intesa Sanpaolo.
According to Mameli, growth will only resume in the second half of 2103.
“As the present phase seems to be characterised by a strong correlation between business/consumer confidence indices and stress indices on the financial markets, our central scenario takes into account that, if the present downtrend in risk premiums continues, this will translate into a recovery in confidence and also through the credit circuit, activity levels,” he said.
However, the economic picture remains very fragile, and even if easing tensions on the financial markets trigger a virtuous circle in terms of confidence and credit, it will take time for this to translate into an impact on the real economy.
Intesa estimates the decline in investments at -8.5%.
“According to the same estimates, the new growth profile and projected interest expenditure based on the forward rates curve, point to a deficit of 2.6% this year and of 1.9% in 2013, from 1.6% based on the government’s current legislation picture,” Mameli said.
Meanwhile, the effects of the austerity measures, and still tense financial conditions, will continue to weigh on the economy.
“Our central scenario, in which financial tensions continue to ease, points to an attenuation of the recession already as of the end of this year, and throughout the first half of next year; however, a return to growth is unlikely to materialise before the second half of 2013,” Mameli said.