GDP, Confindustria: “It will rise by 6.3-6.4% in 2021”. But the virus worries

Strong rebound in growth confirmed. The Confindustria Study Center raises its estimates for this year, compared to what was expected in October. But they scare the rise of infections and there is a fear of the lack of raw materials

In Italy a solid recovery in growth is confirmed this year but clouds are gathering on the horizon due to the lack of raw materials and the resurgence of infections from Covid in recent weeks. “Thanks to the robust rebound in the third quarter and the improved data for the first, 2021 could close with an Italian GDP of + 6.3 / 6.4%, more than expected in October”, says the Confindustria Study Center in its November flash situation, underlining that “it would return to pre-Covid level in the first quarter of 2022”. But Viale dell’Astronomia also warns that in the fourth quarter “the expected slowdown is emerging, due to the scarcity of raw materials and semi-finished products and the rise in infections in Italy and Europe, which make the high uncertainty persist”. In addition, expensive energy “penalizes” businesses and households, considering that energy “accounts for 8.3% of the consumption basket”, highlights the Csc, acting as a “brake”. Although Italy is a non-negligible producer of oil and gas, “89% of oil, 94% of gas, 100% of coal are imported”, points out the CSC.

The cost of energy penalizes families and businesses

“Among the main European countries, Italy is the one most exposed to the rise in the price of natural gas”, the price of which shows a 430% jump over the course of this year. The impact of higher energy costs is discharged, first of all, on companies But oil and natural gas also count a lot for the budget of Italian families and the higher spending absorbs resources that could have been channeled towards other goods and services, thus slowing down the rise in private consumption.

The industry is slowing down, but it is growing

Industrial production grew in the third quarter at a slower pace (+ 1.0%) than in the first two quarters (+ 1.5% and + 1.2%). The slowdown is attributable to difficulties on the supply side: the scarcity of some production inputs also weighs on Italy. However, the prospects are good: in October the manufacturing PMI confirmed its expansion and rising (61.1 points), after the decline of the previous months; orders and expectations on production increased in November.

Services remain in recovery

The confidence of service companies held up in November, with good expectations for orders, while the PMI started the fourth quarter down, albeit above 50 points. A physiological slowdown: the recovery of the sector should continue, with some shadows. There have been no other blocks in services but the uncertainty for the new epidemic wave could slow down the tourist flows, after the recovery until September (-19% foreign travel to Italy compared to 2019, from over -80% in May ).

Busy on the way up

The positive trend in 2021 is confirmed: the number of employees, after the minimum in the first quarter, recovered more than half of the fall until September. While employees are almost at pre-pandemic levels (-62,000 permanent units, -14,000 temporary workers), the decline in self-employed workers has not yet stopped (-312,000). From January to October, net activations were around 600,000, almost 500,000 more than in 2020 and over 190,000 more than in 2019.

Consumption is driving the rebound

Private consumption is expected to rise further in the third and fourth quarters. The recovery margins are wide: spending on services is still compressed; as well as car registrations, which are recovering, but partially compared to the collapse of 2020 (+ 12.8% until October, after -30.9%); a part of the extra savings accumulated in 2020 remains to be spent. Furthermore, consumer confidence in October-November decreased little, remaining high; and orders from consumer goods producers have recovered again. Conversely, high energy prices act as a brake.

Investments are still growing

Domestic orders for capital goods producers remain at a good level in November. Therefore investments, already beyond the pre-crisis values, are estimated to expand in the third and fourth quarters, including in machinery and equipment. The increase in commodity prices acts as a brake, compressing corporate margins and cash flow. On the other hand, it is positive that interest rates remain at their lowest levels, thanks to the hyper-expansionary ECB: the BTP is at 0.92% in November, the cost of credit in Italy at 1.2%.

The Italian export of goods is slowing down

In September, it fell after three months of climbing. On average in the third quarter, the trend is almost flat at constant prices (+ 0.1%). The performance remains very heterogeneous between sectors and markets: the fall in means of transport weighs heavily; weak sales to the United Kingdom and, more recently, to Switzerland. For the fourth quarter, foreign manufacturing orders (ISTAT and Markit) signal expansion. However, delays and shortages in international supply chains, which are already reflected in a setback in world trade and a drop in German exports in August and September, risk having an impact on Italian exports also in the last months of the year. 2021.