They leave us only rubble. The Legacy of the Best is a Country in Recession – Time

They leave us only rubble. The Legacy of the Best is a Country in Recession – Time
They leave us only rubble. The Legacy of the Best is a Country in Recession – Time
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Dario Martini

September 16, 2022

“I don’t see a recession this year. It seems very difficult to me. The reason is that we closed last year very well and therefore we carry acquired growth with us ». This prediction by Mario Draghi dates back to 11 May. The prime minister was in Washington visiting Joe Biden. Energy prices had already shot up and inflation had begun to erode Italian wallets. Despite this, the premier remained confident. Four months have passed and the scenario that Italy faces does not appear rosy at all: inflation is at its peak, public debt has reached an all-time high, one in four citizens is at risk of poverty and the recession is transforming in reality. A creepy economic tsunami that the next government will have to face.

The international rating agency Fitch outlines a black scenario. “With the energy crisis in progress in Europe – reads the new Global economic outlook – we expect the Eurozone economy to enter recession in the current quarter”. Germany and Italy are the most affected. Their forecasts for 2023 are adjusted downwards, by 2.8 points and 2.6 points, respectively. The German one stood at -0.5%, while the Italian one collapsed to -0.7%. The agency expects a contraction of the Eurozone’s GDP of 0.1% in 2023, compared to the previous growth forecast of 2.1%. This, explains Fitch, “despite the recent better than expected results for the growth of the euro zone in the second quarter of 2022, thanks to the reopening of the economies and the return of international tourism. This positive surprise has led to a slightly higher annual growth forecast for 2022, equal to 2.9% compared to 2.6% in June, but this is only a reflection of the arithmetic of the annual averages ». What will the consequences be? “A direct blow to the production and purchasing power of consumers,” writes Fitch.

Despite the government’s great commitment to reducing dependence on Russian methane, which has dropped from 40 to 20%, Italy is still one of the EU states most dependent on gas, which feeds 50% of electricity production compared to 20% of Union. Russia supplied 40% of gas imports in 2021. Even if 80% of Russian gas imports were restored, “the total gas supply would decrease by 5-10%, with a direct effect on the production sector”. The rating agency explains that in 2023, assuming an average annual gas price of $ 55, spending on this energy Source “could go beyond 5% of GDP, up to 2 percentage points more than in Germany. This will leave fewer resources available for consumption and could make certain productions uneconomical, forcing businesses to close ».

As if that weren’t enough, there is inflation. Driving it is the energy sector. In September, the consumer price index could go from 8.4% in August to 9.2% ”, the Confcommercio Research Department predicts. “It should be the maximum peak,” explains director Mariano Bella. The business association also uses the word “recession”, but accompanies it with the adjective “mild”. GDP in the third quarter could mark -0.8% compared to the previous three months and + 1.1% compared to the third quarter of 2021. For Confcommercio, the problem will be 2023, “with a return to a lack of growth”.

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Bank of Italy notes that in July the public debt increased by 2.6 billion compared to the end of the previous month, reaching 2,770.5 billion. This is the highest level ever reached in the historical series, after the 2,767.885 billion in June. The president of the National Consumers Union, Massimiliano Dona, points out that “if it were a family debt, it would be a heart attack debt, equal to 105,000 and 773 euros. To Italian it would be equal to 46 thousand and 970 euros “.

Bad news also from Eurostat. The data refer to 2021, when the war in Ukraine had not yet broken out. The EU statistics office estimates that “the percentage of the European population at risk of poverty or social exclusion has increased compared to 2020, from 94.8 million to 95.4 million people (from 21.6% to 21 , 7%, one in five). In Italy, on the other hand, the provisional percentage is 26%, therefore one in four.

The repercussions on the productive fabric are enormous. For Federmeccanica this year “the companies in the metalworking industry that risk being stopped are 7%”, and “7 out of 10 companies struggle to find the required profiles”. Confcommercio, on the other hand, predicts that “by the first half of 2023 the businesses that could close are 120 thousand”.

The article is in Italian

Tags: leave rubble Legacy Country Recession Time

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