With "investments still weak" today it is "urgent to accelerate the Pnrr" warns
the Confindustria study center
in an in-depth analysis .
"The dynamics of fixed investments in Italy essentially stopped in 2023 (-0.2% trend in the 3rd quarter), compared to the brilliant rhythms of 2021-22", note the economists on Via dell'Astronomia.
"Those in construction fell more, but the decline extended to machinery and equipment (-0.4% in the 2nd, -0.9% in the 3rd)".
"There is a timid recovery", the investment dynamics "could improve this year. This is essential for short and long-term growth".
"The first half of the year could record a flat trend in investments, but a modest recovery is expected thereafter, thanks to the improvement in credit and the implementation of the Pnrr", estimate the economists of the Confindustria study centre, directed by Alessandro Fontana.
After having "reached the minimum towards the end of 2023"
the indicators "draw a picture of stabilization of investments, no more decline:
in the fourth quarter the conditions for investing improved, although remaining negative; uncertainty, crucial for spending decisions of companies decreased in the 3 months up to January 2024; orders from companies producing capital goods are just above the minimums, with a recovery in January; this is reflected in production in the sector recovering slightly at the end of 2023; demand ( measured by manufacturing orders) has improved little in early 2024."
And there are "latest rosier data for investments in construction", with in December "a strong recovery, perhaps linked to the expiration of the super bonus at the end of the year".
In terms of loans to businesses, the CSC records a "softening decline. The tension on bank credit is starting to ease for Italian businesses" even if "it is worse than in other large European countries".
The lower credit, due to high rates which compress demand and a tightening of supply, therefore impacts the competitiveness of Italian manufacturing. Shorter data, however, show that in Italy the decline in loans has almost disappeared (-0 .3% in December 2023 from September) compared to previous collapses (-4.3% in the same three months of 2022). And credit flows are expected to return positive in the second half of 2024, in the wake of the expected reduction in rates" .
The impact of "high rates" remains but they are "expected to reduce.
The cost of credit for businesses in Italy has increased rapidly from May 2022, when it was 1.19%, reaching 5.46% in December 2023 (peaked at 5.59% in November.) This is a higher rate than what businesses pay in Germany (5.19%), Spain (5.02%), France (4.87%). This is weighing on the costs of Italian businesses and their competitiveness compared to their EU partners. However, the prospects of an ECB rate cut in the coming months fuel the expectation of a moderation in the cost of credit and this could facilitate investments in the second part of the year; at the beginning of 2024, on the contrary, this may delay investment decisions while waiting for the cut to materialize".
For the implementation of the Pnrr "almost 41 billion euros have been spent so far out of 194.4 of RRF resources (21%), of which only 13.1 in 2023. Most of the expenditure concerns pre-existing measures and/or tax incentives (Ecobonus, Transition 4.0 tax credits). In 2024-26 spending will be at unprecedented and challenging levels with the risk of not being able to achieve it within the deadlines: over 42 billion in 2024 alone".
An "encouraging sign" comes "from the almost 100 billion in resources already committed by the implementers of the plan".
For Confindustria economists,
the remodulation of the Pnrr is positive
, which focuses more resources towards investments for around 12 out of 14 billion (6.3 for the 5.0 transition, 2.5 for green and net zero technologies supply chains). The use of automatic tools to speed up spending and reach targets".
"However, there remains high uncertainty about the replacement sources of financing for the measures taken out of the plan, which could weaken infrastructure investments. The provision with the measures necessary to implement the remodulated plan will be launched in the next few days" and "many companies are postponing investments pending of the definition of benefits (transition 5.0)".
The industry is close to ending the downturn
In an "early 2024 with higher rates for longer and more expensive oil, but greater confidence and expanding services", the Confindustria study center sees "lights and shadows" on the economic situation and forecasts.
"The Italian GDP, which grew at the end of 2023 (+0.2%) thanks to services and construction, in the first quarter of 2024 is supported by increasing confidence and inflation just above the minimums. The industry seems close to ending the downturn phase , but rates will remain high for longer than expected."
And "the brake on trade flows remains due to the reduction of transits in the Suez Canal", note the economists of Via dell'Astronomia.
The 'Flash Economy'
analysis
by the research center in Via dell'Astronomia traces all the main economic indicators and forecasts.
It highlights how "wide the Italy-Eurozone gap is" due to inflation which in Italy "rose slightly in January (+0.8% per year, from +0.6%), due to an adverse 'base effect' on prices It also grew in Spain (+3.5% from 3.3%), decreased in Germany (+3.1% from 3.8%) and France (+3.4% from 4.1%): in the Eurozone average it fell just to +2.8% from 2.9% in December".
Meanwhile, "the timeframe for rate cuts is lengthening. Market expectations on interest rates remain low, but indicate that the slow deceleration of prices could lead to a delay", and "now the first cut is expected in May, not more for March-April. Sovereign rates were little affected."
On the employment front, "improving indicators
. In December 2023 the employment rate rose to 61.9% (from 59% at the end of 2019), the activity rate to 66.8% (from 65.5%), while the unemployment fell to 7.2% (from 9.7%). The expansion of employment lost momentum in November-December, and is now closely linked to the trend of economic activity."
While "the recovery of the purchasing power of wages, which began in spring 2023, is expected to strengthen in 2024 and, only partially, will support family consumption".
For consumption, "mixed signals so far. Retail sales fell in December (-0.5%, but +0.1% over the 3 months), but in January the confidence of families and retail businesses rose again. Yes The financing of consumption through savings is running out, which will actually be reconstituted thanks to the increase in real income. The opinions on the opportunity to purchase durable goods are negative, due to the high rates".
"Services drive" the economy.
But in industry the decline is easing, in line with the recovery of business confidence (which remains low) and the expectations of stabilizing production indicated by companies in the CSC rapid survey.
Exports are "recovering amidst new risks: tension in the Red Sea remains. In the global scenario, there is "stagnation in the Euro Area.
In the USA "braking signs".
China "expanding".
Reproduction reserved © Copyright ANSA