With a growth of 0.1% in July 2017 compared to the previous month, and an increase of 4.4% compared to 2016, Italian industry output represents a new step forward in the latest Istat statistics and proves expectations of a negative result as indicated by a large number of analysts to be wrong. It “would have been an inconceivable figure even just one or two years ago,” commented Prime Minister, Paolo Gentiloni, during the inauguration of a school in Milan, in Cernusco sul Naviglio. “Our country is at last making a slow recovery, in fact even less slow than previously thought”, added the PM. Secretary of the Democratic Party, Matteo Renzi, rejoices on Twitter: “We’re bringing Italy out of the crisis. Salvini and Grillo want to take Italy out of the Euro.”
ISTAT. Another step forward with an increase of 0.1% in July on the previous month and 4.4% over the year
Recognition also comes from the City via the Financial Times: “Recovery is under way. Italy is on a roll right now,” reads the London daily newspaper. Production figures are “the latest in a series of better than expected economic data,” continues the article, “the strong growth is likely to continue,” and optimism “has also been reflected in increasing labour force participation’. Driving the industry are capital goods, up 5.9% in July over the year, which have greatly exceeded production levels in 2010, as explained by Istat. In particular, machinery and equipment stand at + 8%, a figure which the Minister of Development, Carlo Calenda, interprets as a sign that Italy’s Industry Plan 4.0 “is working in its stimulation and support of business investment.”
Machinery and automotive are the driving forces, Gentiloni: “Recovery is not as slow as we might have imagined”
Positive signs can be seen in all macro sectors and in twelve out of fifteen activity sectors, starting with mining (+ 8.4% on the year), machinery manufacture (+ 8%), the food industry and transport manufacture (both + 6.9%). Volatility in automobile manufacturing continues (+ 9.1%), while the manufacture of electrical and non-electrical domestic equipment and appliances is suffering, along with computer and electronics products (both at -0.6%) and the textile and clothing sector (-0,5%). With July’s result, there has been a sequence of rising trends in industrial production which has continued, with the exception of January 2017, from August of last year. According to Paolo Mameli, senior economist at the Intesa Sanpaolo bank, these figures “bode well” for the third quarter and “an upward review of the estimated growth in Italy’s GDP is expected to continue in the weeks to come.”
EURO AT ITS HIGHEST LEVEL. In the meantime, the Euro continues to race ahead, reaching a level that has not been seen since January 2015, before Draghi’s quantitative easing came into play. It is thanks to the risk of a Eurozone implosion having been averted, and estimated GDP growth standing at 2.2% this year (way above the US). But the ECB itself seems to have accepted that some appreciation is inevitable: if Draghi has set the Euro at 1.20 “a source of uncertainty that needs to be monitored’, those words are a far cry from 2014, when the Euro stood at 1.40, and the ECB President had spoken of “serious concern” regarding the exchange rate. Tapering, or gradual reduction of the QE programme, is now the next stage in Mario Draghi’s agenda.