The economic effects of the Russian-Ukrainian conflict “are not yet fully reflected” in the dynamics of industrial production at March 1 “however, they will contribute to generating further imbalances in industrial activity in the coming months, worsening the scarcity of some commodities, making the increases more lasting of their prices, as well as increasing uncertainty, thus risking to compromise the evolution of GDP in 2022 ”.
This is highlighted by the rapid analysis of industrial production by the Confindustria Study Center: “The contraction of industrial activity continues in February, -0.3%, after the fall in January, -0.8%”.
“Italian industrial production is expected to decrease in February (-0.3%), after the most marked decline in January (-0.8%), although only minimally incorporating the effects of the clash between Russia and Ukraine that is increasing the supply difficulties of businesses and pushing the prices of raw materials and energy even higher “. This is what emerges from the latest rapid survey by the Confindustria Study Center.
The data on the confidence of manufacturing companies “show a slowdown in the first two months of the year, mainly driven by pessimistic expectations on the economic prospects, even before the outbreak of the war”.
The study reports a contraction in industrial production in February of -0.3%, after a decrease of -0.8% in January. In the 1st quarter of 2022 the change acquired would be -1.0% (from + 0.5% in the 4th quarter of 2021 and + 1.0% in the 3rd). Volume orders are expected to rise by 0.3% monthly in January and by 0.1% in February.
The impact of expensive energy on Italian economic activity had already caused a sharp slowdown in industry production: the index drawn up by Istat in December 2021 decreased by -1.0% compared to the previous month.
In February, the manufacturing PMI was confirmed at an unchanged value compared to that of January (58.3 points), which is the lowest since February 2021. According to the IHS-Markit survey, significant concerns of entrepreneurs emerge. the difficulties in operating conditions and the increase in the purchase prices of raw materials, which continued to influence the expectations of companies. At the same time, the confidence of manufacturing firms contracted (113.7 from 114.9). This trend reflects the difficulty of industrial companies in coping with the rise in energy prices which, despite the government interventions implemented to support companies for the 1st quarter to cope with the shock, compresses the margins of companies to the point of slowing production. .
The economic effects of the Russian-Ukrainian conflict, which exploded on February 24, are not yet fully reflected in the production dynamics estimated for February (data collected from February 21 to March 1). However, they will contribute to generating further imbalances in industrial activity in the coming months by worsening the scarcity of some commodities, making the increases in their prices more durable, as well as increasing uncertainty, thus risking compromising the evolution of GDP in 2022.