BETWEEN WARS AND DUTIES/ Fortis: Italy has an escape route to avoid modest growth
Israel-Iran War Opens Another Bad Front for the Economy. It Is Possible to Push Growth with Investment
The possibility of an escalation of the war between Israel and Iran is becoming increasingly concrete, with the consequences that this could have for our economy, also given the growing Italian exports to the Arabian Peninsula.
“Looking at the 2024 data – confirms Marco Fortis , director of the Edison Foundation and professor of industrial economics at the Catholic University of Milan -, Italian exports to Saudi Arabia, the United Arab Emirates and Qatar amount to 16.3 billion euros, a value higher than that of goods directed to China (14.7 billion). These are therefore important markets, but I do not see them disturbed too much by the conflict between Iran and Israel or by the risk of its escalation. The main concerns instead concern the supply of energy raw materials in the event that the Strait of Hormuz is closed, with the consequent increase in their price and therefore inflation”.
Considering the uncertainties already existing regarding duties, the overall picture does not appear very positive…
Certainly the conflicts, let us remember that there is already one underway in Ukraine, are a disturbing element for economic operators in a not particularly brilliant framework, given the downward revisions on the growth of the advanced countries that have also been made by virtue of the uncertainty relating to the trade policies of the American Administration.
According to Confcommercio, the propensity to spend of families remains weak. Is there a risk that the international situation could slow down consumption?
This risk exists, but it does not worry me too much, in the sense that consumption is making a relatively important contribution to GDP in the context of a growth that remains modest, but to which all the main EU countries and the United States are forced to a certain extent. In any case, the composite PMI index for May for Italy (52.5) was the highest in the last 13 months and was also the best among the four main economies of the Eurozone.
What is the reason for this performance of our economy?
Consumption is trending, but at the moment our economy is being driven by investments: investments in machinery have also started to grow again in the last two quarters. There is also a piece of data that I think is important in a period in which we are talking about low wages and poverty in our country.
What data is this?
Of the indicator of severe material deprivation measured on the basis of 13 different signals, ranging from the inability to face unexpected expenses to having debts to not being able to afford a proper meal once every two days: if in 2015, after the austerity of 2011-13, there were 7,386,000 Italians in this state, in 2024 they became 2,710,000, 4.6% of the population. Just to make a comparison, in France last year 6.6% of the population was in severe material deprivation, in Spain 8.3%, in Germany 6.2%.
What does this decade-long improvement tell us?
That there has been a strengthening of the social fabric of our country which, combined with the ongoing recovery of purchasing power, can contribute to the stability of consumption, even if we certainly cannot expect that they will be able to bring us to a GDP growth of 3% per year, also because the population is decreasing.
Is there, instead, a risk that energy costs, which already weigh heavily on our businesses, will increase, as was reiterated a few weeks ago at the annual Confindustria Assembly?
This is a risk that particularly concerns energy-intensive sectors, such as ceramics and steel, which are also exposed to the consequences of possible US tariffs.
What can Italy do to try to push growth in such an uncertain phase?
A country where the population is decreasing should, in my opinion, aim to strengthen the investment cycle, also to try to strengthen its industry given that Transition 5.0 is not working as expected. Furthermore, I think it is important that our manufacturing industry is ready when Germany begins to implement the mega-investment plan for which it launched the debt brake reform. Therefore, in my opinion, a plan similar to Industry 4.0 would be needed, which could be centered on the use of artificial intelligence in companies .
(Lorenzo Torrisi)
— — — —
We need your help to continue providing you with quality, independent information.
İl sussidiario
