Assiom Forex of Milan, Bonomi: “I don’t see a recession. Inflation down in the second half of 2023”
“The debt of Italian businesses and households remains low by international comparison, despite the significant reliance of companies on secured loans after the outbreak of the health emergency and the sustained dynamics of mortgages observed in recent years. She said it all’Assiom Forexthe governor of Bank of Italy, Ignatius Visco.
Specifically, the debt of businesses and households, “in relation to Pil, is a total of 112%, compared with an average value of 168” for the euro area. There financial stability of our economy also benefits from the improvement in the financial structure of companies, which began in the early years of the last decade and was only temporarily interrupted by the pandemic crisis”, he added.
Also, he explained Visco“the scenario analyzes conducted in Bank of Italy indicate that the vulnerability of the sector overall would remain limited short of a deterioration in economic conditions and the cost of debt far higher than expected. Even in an adverse scenario, characterized by a significant reduction in the gross operating margin and a significant increase in financing costs, the share of debt held by particularly vulnerable companies would remain at values much lower than those reached during previous serious episodes of crisis” , the governor stressed.
“Even the risks that come with the financial situation of familieswhich is also affected by the worsening of economic prospects, remain limited on the whole”, he explained Visco recalling that, in the last decade, the debt has remained essentially stable, just over 40% of Pil.
As for businesses, also for households “a further risk mitigating factor is represented by the large availability of liquid assets” equal to over 1,600 billion euro last September, “a high level by historical comparison, even when valued in terms real, and equal to more than a third of the total financial assets of the sector”, he concluded Visco.
Visco, global economy slows down: but better indicators expected
“The global economy is slowing down; uncertainty remains very high even if the most recent indicators are better than expected. The economies of Italy and the euro area are also decelerating, after much better-than-expected results for the whole of 2022,” he said. Visco.
“Despite the expected recovery of China – he added – according to the latest projections of International Monetary Fund the rate of expansion of world product should be 2.9% this year from 3.4% in 2022; for trade it would drop from 5.4 to 2.4%”.
For Italy, Visco recalls the forecasts according to which “after the 0.1% decrease recorded in the fourth quarter of 2022, economic growth would drop to 0.6% this year”.
“Signs of containment of the inflation dynamics registered in the last months of the past year were confirmed in January; short-term inflation expectations are down sharply markets financial”, says the number one of Bankitalia, recalling that “the returns on derivative contracts indicate that the rate of inflation expected in twelve months’ time it is equal to 2.3%, less than half the levels at the end of November”.
Furthermore, “expectations for more distant horizons remain, net of risk premiums, at values consistent with the objective of price stability, equal to 2 per cent in the medium term. The anchoring of inflation expectations is also confirmed by the results of the polls conducted among analysts in January. A decrease was also recorded for the inflation expectations of businesses and households”.
In addition, in January “from the peak of 10.6% reached in October inflation has come downaccording to preliminary estimates, to 8.5%, even if the core component (net, i.e., of energy and foodstuffs) consolidated at 5.2% due to the usual delay in the transmission of the price dynamics of the power”.
“The burden of dealing with the many facets of this crisis cannot fall, as has often happened in the past, on monetary policy alone”. Visco further recalls that in the final considerations on 1981, the Governor Ciampi stated that “monetary stability is a common responsibility, an asset never definitively acquired”.
“It was true then in our country – he therefore argues Visco – it is true today in the euro area: in a phase of great uncertainty, the choices of all the actors, European authorities, national governments and social partners, must be consistent with each other, taking into account the contribution that each one provides to the final result”.
Subscribe to the newsletter