January 31, 2023

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Confcommercio Alert, “Recessionary Cycle Has Been Kicked” – The Economy

“The slowdown in household demand was supposed to lead to a recessionary cycle of reduced duration and severity.” This is confirmed by the Confcommercio research office, which estimates that January’s GDP “decreased 0.9% in economic terms, with growth of 0.4% in January 2022, laying the foundations for a first quarter of recession”. As for inflation, consumer prices in January should have increased by 0.6% compared to December, bringing the trend rate to 10.5% (from 11.6% in December). But for Confcommercio “it is difficult to assume that the average price growth in 2023 will be less than 6%”. The significant legacy of 2022 (acquired inflation for 2023 was equal to 5.1%) “and continued growth in core inflation makes it difficult to assume average price growth in 2023 of less than 6%,” Confcommercio explains.

According to Confcommercio – the stage of “contradiction” between the evidence emanating from the economic indicators continues. “The strong recovery of confidence contrasts with the stalling in consumption growth in the last quarter of 2022. Production and employment are expected to decline between last November and the current month of January, however very positive signs are showing on the inflation side, very high but likely to decline. significantly in the coming months. “Despite the erosion of the purchasing power of current income and liquid wealth, which is only partially offset by public support, the attitude of households remains positive and there are no drastic changes in purchasing behaviour. Therefore, we can exclude, at least in the short term, cuts radical and generalized in demand.” In November, industrial production confirmed its downward trend,” a trend that will continue until the first months of 2023, according to the Entrepreneurs’ Index. In November, the labor market showed great stability with a slight decrease in the number of workers (-0.1% in October, Equivalent to -27 thousand units) In the same month, consumption, expressed in a CCI measure, confirmed the trend towards less dynamism, with a growth of 0.4% year on year. The data is a synthesis of the decline in demand for goods (-0.2%) and growth for services ( +2.7%) Overall in 2022, the CCI recorded a growth of 4.2%, a combination of a significant recovery of services (+15.5% in 2021) and a moderate growth in demand for goods (+0.4%) Despite this very positive trend, Consumption levels, however, are still far behind the overall values ​​for 2019 (-4.1%) and services are confirmed to lag behind (-11.2%), as is the segment to the automotive sector (-23.8%) and clothing and footwear (-23.8%). -6.6%).

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