August 8, 2022

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IMF and Italy slow in 2023. Standard & Poor’s lowers expectations on reforms – Economy

Italy will perform better than expected in 2022. Thanks to the recovery of tourism and industrial activity, the growth of this beautiful country is expected to reach 3% this year. But in 2023 there will be a “significant slowdown” partly linked to higher energy prices. In this context, it is necessary to continue with reforms. This is the photo taken by the International Monetary Fund, which notes “increasing political uncertainty”, hoping that the path of reform will not be abandoned.

S&P is also focusing on reforms confirming Italy’s BBB rating, reducing its outlook to stable from positive after the risks of reforms linked to early elections. “The stable outlook reflects the risks that a slowdown or reversal of reforms” may have on the Italian economy and public finances, says Standard & Poor’s, stressing how “the review also reflects rising inflation and risks to Italy’s energy supply.” Standard & Poor’s does not expect No immediate financial risks from moving to the new government after the election, but notes that the early vote “comes at a difficult time” for the Italian and European governments. The agency also does not rule out a complete halt to gas flows from Russia: this – he explains – would cause Italy records negative GDP growth in 2023 and 2024. Currently, Standard & Poor’s estimates Italian growth at + 2.8% in 2022 and 1.9%. in 2023. “This is an important moment because there are many reforms and programs in framework of the European plan. We hope that the reforms will be made, they will be useful for Italy. Whatever government is in power we hope to support it,” IMF Chief Economist Pierre-Olivier Gorinchas stressed how the Fund’s base scenario for Italy was laid out before recent political events, and includes reforms. After +3% in 2022 (+0.7 percentage point Compared to the April forecast), Italian GDP in 2023 will slow to +0.7%, down from the 1.7% estimated just three months ago.Moody’s also drags Italy’s growth down: Italy’s GDP this year is expected to grow by 2.2% The next is at 0.8% compared to the +2.3% and +1.7% estimated previously.

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The IMF’s allocation to Italy in 2023 is part of a general contradiction with the global economic slowdown. Indeed, the risks of a recession have risen, and are “particularly exacerbated” for 2023, between the war in Ukraine and its aftermath, Covid and inflation. The IMF acknowledges that prices are and will remain high: Washington experts say fighting inflation is the priority within hours of the new Fed rate hike. The global economy is in danger of finding itself “on the verge of recession,” Gourinchas explains. In an update on the global economic outlook, the fund lowered global growth estimates to +3.6% this year and to +2.9% the next, and those for the eurozone and the US. He warns: If some of the downside risks affecting the outlook materialize, the world could slow further, falling to +2.6% in 2022 and +2.0% in 2023, a level touched only five times since 1970.” In this scenario, both the US and the eurozone will see near-zero growth next year, with negative impacts on the rest of the world,” the IMF chief economist highlights. The Fund notes that the chances of a recession for the G7 economies are “nearly 15%,” or “four times the usual level.” For Germany they are almost “one in four”.

For the United States, “some indications” are that “a technical recession may already have begun,” the fund notes, while outlining how the United States, in its view, can avoid a recession even if the path is very narrow and a small shock will occur. be enough to change the image. Attention is high on US GDP in the second quarter: according to analysts, the economy may have contracted again, effectively signaling states entering a technical recession. The White House has been downplaying for days despite realizing the political risks that could mean a few months ahead of the November midterm elections. “I don’t think we’re going to see a recession,” Joe Biden said in the past few hours, echoing Janet Yellen. The Treasury secretary, whose international standing and credibility Republicans do not question, will present himself to Americans on July 28, GDP Day, at a news conference. Perhaps, as the wicked say, to reassure.

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