The prospects for the Italian GDP for 2022 are improving. This is what emerges from the latest report of the Maurizio Mazziero Research which sees an Italian GDP for 2022 at + 3.6%, an improvement compared to the previous estimate of + 2.7%. The preliminary estimate of GDP for the 2nd quarter made by Istat a +1,0% it turned out to be well above expectations, in fact, Maurizio Mazziero’s estimates indicated a slightly negative value at -0.1%. The previous forecasts were affected, in fact, by the international climate of economic slowdown and the criticalities on energy goods linked to the Russian-Ukrainian conflict. A scenario that has certainly hit in Europe with a flat 2nd quarter for Germany and + 0.5% for France, half of Italy.
In other respects, more linked to the Fed’s restrictive policy, the United States also recorded negative growth for the 2nd consecutive quarter and therefore would already be in technical recession.
The Italian figure, even if it may be slightly revised in second reading by Istat, as Mazziero observes, has something surprising in that it depicts an economy that, despite all the typical criticalities of our country, remains resilient, partly thanks to the support measures for businesses and households that have been prepared up to now.
As mentioned earlier, Mazziero now estimates a growth of Italian GDP in 2022 by + 3.6% and this estimate would be the result of + 0.3% in the 3rd quarter and flat growth in the 4th, values that have not been cautiously changed compared to previous forecasts. “We can already consider today that, barring strong worsening of the national economic climate, this year growth should be between 3 and 4%, with the possibility of reaching the top of this range”, comments Maurizio Mazziero.
Estimates of public debt
For the month of June, Mazziero’s estimates indicate a further slight increase in public debt with upward revision of the historical record. In particular, the new forecasts see a debt of 2.763 billion, up from the previous 2.756 billion. However, as Mazziero observes, this “increase in the estimate of the debt falls within the confidence fork and therefore can be considered as a substantial stability of the debt”.
The graph shows the official data published by the Bank of Italy with a red line, and continues in gray with the values estimated by Mazziero Research.
An eye on the spread
After rising to 250 basis points, close to the levels reached in the initial phase of the pandemic, the BTP-Bund spread is gradually walking down.
We remind you that the BTP-Bund spread expresses a measure of the risk of the Italian economy with respect to the issues of German government bonds, considered risk-free. It does not necessarily express a measure of interest expenditure that is determined by the average yields of outstanding government bonds.
The reasons for the decline in the spread can currently be summarized as follows:
1) The Draghi government remains in full power until the new government takes office, which will arise from the next elections on 25 September.
2) The anti-spread shield (TPI Transmission Protection Instrument) can only represent a parachute in the face of a series of conditionalities including the absence of macroeconomic imbalances and the sustainability of fiscal measures also in relation to the application of the PNRR.
Consequently, at the moment the market operators seem to favor a substantial continuation of the commitments made by the Draghi government at an international level.
Interest expense
Interest spending is showing less weight than forecasts, given that for the moment the average increase in yields has not yet exceeded the average of the coupons on maturing bonds. If this aspect appears very positive in the current phase, it will present significant problems in the future also due to possible underestimates.
In June 2022, gross interest expenditure stood at 30.1 billion euros and the estimates by Mazziero Research see gross expenditure at the end of 2022 equal to 60.1 billion.
Rating Italia
With an unscheduled decision, S&P revised the Italian rating maintaining the credit rating at BBB, but taking the outlook from positive to stable.
At the base of this decision the uncertainties on the reform path due to the fall of the Draghi government.
The note expresses various fears about the Italian prospects, including the risks of public finances drifting and the failure to achieve the objectives of the PNRR.
As Maurizio Mazziero points out, i ratings could be under pressure if the Italian economy were to fall into a prolonged recession, leading to a worsening of fiscal results. A prolonged inflationary shock, together with weak growth, would also represent a risk for Italian public finances and, consequently, for ratings.
“S&P therefore opens the dance on the Italian rating and there is no doubt that now it will also be followed by the other rating agencies, in particular Moody’s and Fitch which, however, already have a stable outlook, but which could change negatively depending on the proceeding of the electoral campaign “.
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