Bank of Italy: spread increase not justified by fundamentals, growth for 2022 at + 3.2%

From GDP to inflation the impact of the war on

(Finance) – Despite worsening prospects for growth, “the sharp increase in yields and the differential observed in Italy does not appear to be justified by the underlying macroeconomic conditions”. This is what we read in the latest economic bulletin of the Bank of Italy which notes that the debt-to-GDP ratio is expected to decline and the average residual life of the debt is high (close to eight years) and will mitigate, diluting it over time, the impact of the rise in interest rates on interest expenditure.

“Even the sudden ones changes of some indicators of risksuch as the redenomination risk premium and the activity on derivative markets hedging risks other than those originating from the Italian sovereign market, seem to contribute to the perception of a misalignment – added via Nazionale – between market valuations and fundamentals cheap “.

The Bank of Italy has revised up this year’s forecast of GDP to + 3.2%, mainly reflecting the growth already acquired, while the estimate of growth 2023 to + 1.3% and filed that on 2024 to + 1.7%. The data relate to the “baseline scenario” in which the conflict is assumed to continue throughout 2022, without however leading to a total interruption of energy supplies from Russia. According to the Bank of Italy, considerable support for economic activity would come from budgetary policy and the interventions outlined in PNRR.

L’occupation it would expand along the entire forecast horizon, albeit at a slower rate than output. Meanwhile, according to the estimates of Via Nazionale, the “barely positive growth in the first three months of the year strengthened in the spring, supported by the contribution of all the main sectors”. Above all, the services thanks to the recovery of sectors, such as tourism and transport, most affected by the resurgence of the pandemic at the beginning of the year. The buildings continued to benefit from measures tax favorable. There production manufacturing it would have returned to an average increase in the second quarter; however, the high-frequency indicators point to a cyclical reduction in industrial activity in June.

Finally, the Bank of Italy reported that about three quarters of manufacturing firms report difficulties supplying from subjects prime and intermediate inputs and nearly two-thirds are hindered in their business by price increases energetic.

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