#OECD #GDP #debt #caution #needed
The Italian economy will grow by 0.7% this year, lower than the 1% forecast by the Government in the Def. And a public debt that will rise to 140% next year, making it necessary to put the deficit “on a more prudent trajectory”. With two chapters of reforms to be implemented, competition and streamlining of justice and public administration on the one hand, and the fight against tax fraud, spending review and control of pension spending on the other. The picture represented by the OECD in its spring ‘Economic Outlook’ does not mix up the Government’s estimates too much, and is similar to that of the International Monetary Fund. But it gives us a glimpse of the little room for maneuver that, after the European vote, once the rules of the new Stability Pact have been clarified, the executive will find itself faced with in the negotiations with the EU to trace the trajectory for debt repayment by inserting it into the programmatic of the Def, omitted from the publication of the Document in April.
Beyond the margins that Rome aims to obtain from the new EU Commission that will emerge from the elections, the reality of the debt will remain, the Parisian organization seems to say: “a large and lasting budget adjustment will be necessary over several years to face future tensions on spending, while placing the debt ratio on a more prudent trajectory.”
OECD economists – it is clear by reading the Outlook – appreciate the “neutral budget position in 2024 and moderately restrictive in 2025”, a point of balance between the need to get the accounts back on track and that of avoiding a fiscal tightening now that monetary policy is still restrictive. If in 2024 the savings resulting from the gradual exit from aid for the high energy costs are offset by the expense of confirming the three-rate IRPEF and the wedge cut, these two measures “under current legislation” will expire in 2025, improving the primary balance of three quarters of a percentage point of GDP. A “largely adequate” budget squeeze for the OECD with debt heading towards 140%, which however is subject to question given by the lack of the programmatic part of the Def, and by the Government’s orientation on the future of tax cuts.
Issues that will be resolved after the summer, in light of the new European balances, of the actual accounts (today the January-April requirement was 18 billion, compared to 11.8 billion a year ago) and of the actual growth in 2024 , where the Government’s estimates remain above those of the OECD and IMF but receive a ‘boost’ from the growth achieved already at 0.5%, certified by Istat last week.
For the OECD, in addition to deploying the public investments of the Pnrr, the structural reforms linked to European aid, PA, competition and justice will be “essential”, where the Government has adopted measures that the opposition instead considers a step backwards. The overall global picture described by the OECD is slightly improving, +3.1% growth in 2024 against the 2.9% expected in February, and Italy at 0.7% is in line with the Eurozone average, crippled by Germany’s meager +0.2%.
The world economy appears to have averted the risk of stagflation caused by the energy shock, thanks to growth that gradually improves and inflation that falls more than expected. Today’s Istat data also reflects this, with a drop of as much as 9% in producer prices for the industrial sector in March 2024 compared to March 2023. A drop that was not reflected equally strongly in the inflation faced by families. So much so that for the economist Carlo Cottarelli, with the decline in raw materials not reflected in consumer prices, “profit margins have increased and the cost of labor has reduced. It is better to hire because real wages have been cut” and this explains it good employment performance.
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