Italy is growing, but slowly

The Forum Confcommercio 2019 was held on March 22-23 in Cernobbio, as usual, at Villa D’Este. It takes place every year, at the end of March, and is successful if the weather is fine. Each year, the Association of Italian Businessmen (Confcommercio) prepares an economic report on Italy and Europe. This time it was dedicated to the European currency, and it was called: “The Euro is 20 years old”.

The report was presented by President Confcommercio Carlo Sangalli and director of analytical center Mariano Bella. And although the report was supposed to be in support of the euro, but it turned out that for Italy, at least, if you look at the data, everything is not so simple.

Forum Confcommercio 2019, photo © Evgeny Utkin

For example, if in 1989-1998 Italian GDP grew by an average of 1.6% per year, while in other countries it was only slightly higher, then with the introduction of the euro, for the years 1999–2018, Italy’s average GDP growth was 0.1%, euro area countries 1.1 %, EU 1.4%, with the EU countries, but not the euro, growing at an average of 2.6% per year.

That is, if you take the GDP per person in the country in 1999 for one hundred, then the report showed that in 2018 real GDP per person in Italy was only 101.2, in France 116.4, in Spain 122.8, in Germany 128.3, eurozone countries 120.8, but the EU countries without the euro 163.2. So it turned out that the euro countries grew less, and Italy practically did not grow at all.

Market participants and scenarios for the 2000s, source © Confcommercio

This affected unemployment. In 2018, employed Italians (among the ages of 20-64) accounted for only 63% (only in Greece is worse, from 60%, but the EU average is 73%, in Germany 80%).

The foreign debt of all European countries grew strongly from 1999 to 2017. On average, in the EU from 64% to 83% of GDP, but, for example, in Italy from 109.7 to 131.2% of GDP, in France from 60.5% to 98.5%. And only Germany has almost retained the level of debt: it grew only from 60% to 63.9% of GDP. It turned out that Germany gained the most advantage from the euro, at least from statistics.

And finally, Confcommercio gave its forecast for Italy for 2019 and 2020. In 2018, GDP grew by 0.9%. According to the October forecast of last year, in 2019 they expected a 1% growth. But now Confcommercio changed their forecast, greatly reducing the growth of Italy this year, only 0.3%. In 2020, too, a very small GDP growth is foreseen, at 0.5%. It turns out that Italy is not in recession, but it is rather difficult to call growth, especially over the past 20 years. It can be said that Italy all these years (on average) is in stagnation.

Market participants and scenarios for the 2000s, source © Confcommercio

The great problem of Italy is the large foreign debt, and the high cost of its service. And accordingly, high taxes on business and individuals. It is said that they will probably have to raise the VAT again, which will cost each Italian family almost a thousand euros of additional expenses. And the Association Confcommercio would not want this to happen.

At Forum performed economists, trade union leaders and politicians. Vice Premier Matteo Salvini, who spoke at the Forum, also confirmed that he did not want to raise the VAT.

Evgeny Utkin with Carlo Sangalli (left) and Matteo Salvini (right), photo © Evgeny Utkin

On the sidelines of the forum, on a green lawn, was discussed a visit to Italy by the Chinese leader with a large delegation of several hundred people, and whether this is good or bad. Mostly were said that it was not bad, it could give new opportunities for Italy, although one should be very careful with the Chinese. Although quite a few people, including Lara Comi, the vice president of the PPE party, the most numerous in the European Parliament, think that Europe as a whole should talk with China, and Italy is too weak a negotiator. But there were no Chinese at the Forum, so there was almost no talk about them. They grieved about Brexit, about the exit of Great Britain from the EU, and that this would lead to negative consequences both in Europe and in Italy.

(from left to right) Donatella Prampolini Manzini, Carlo Sangalli and Luigi Taranto, photo © Evgeny Utkin

But, the weather was beautiful, the sun shined, temperature was up to +20 degrees. With envy, it was possible to observe the clients of the hotel-villa, where they took sunbathing near the outdoor pool right in the lake. Although the economic future of Italy is not particularly pleased, but the sun disposed to a good mood. Therefore, everyone was cheerful, and the Forum, one might say, was a success. Moreover, it was 20 years anniversary. On this occasion, there was festive cake. Which turned out to be very tasty. Not as record as a few days ago, but much tastier.

Evgeny Utkin, Cernobbio, Italy

Here can be your advertising!