Recently IMF released Article IV consultation paper on Italy. I have missed posting this note for some days now due to extensive travel, so here it is, with slight delay.
A depressing read both in terms of current situation assessment and prospects for the medium term future. Which is hardly surprising.
Key struggles are, per IMF: “Exports have held steady, led by demand from non-EU countries, but investment continues to decline and remains 27 percent below pre-crisis levels.”
Err… actually no… exports are still below pre-crisis levels by volumes, never mind price effects on value. Exports of goods and services grew by 6.2% in 2011, but then growth collapsed to 2.1% in 2012 and 0.1% in 2013. 2014 projected growth is for healthier 3.0%, and thereafter the Fund forecasts exports to continue expanding annually at just under 3.6% pa on average between 2015 and 2019. Which is handy, but not exactly ‘booming’. And worse, net exports having grown by 1.5% and 2.6% in 2011 and 2012 have shown decline in the growth rates to 0.8% in 2013 and projected 0.5% in 2014. Thereafter, net contribution of external trade to GDP is forecast to grow at 0.4% in 2015 and 0.1% every year from 2016 through 2019. Again, this is weak, not strong. And keep in mind: GDP does not grow with Exports, it grows with Net Exports.
This post was published at True Economics on September 25, 2014.
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