The prospects for world trade are weaker
In recent months signs have emerged of a deterioration in cyclical conditions in many advanced and emerging economies. The risk factors weighing on global economic prospects include the possible repercussions of a negative outcome to the trade negotiations between the United States and China, the worsening of financial tensions in the emerging economies and the arrangements for the United Kingdom';s withdrawal from the European Union. In the euro area, economic activity grew at a slower pace. The ECB Governing Council confirmed its intention to maintain ample monetary stimulus for an extended period of time.
In Italy, economic activity continues to be weak
The available cyclical indicators point to a possible decline in economic activity in the last three months of the year after the interruption in growth in the third quarter. The industrial and service firms that participated in the Bank of Italy-Il Sole 24 Ore survey indicated a slowdown in investment planned for 2019 owing to the uncertainty surrounding political and economic factors and trade tensions.
Conditions on the government bond market improve
On account of the agreement reached between the Italian Government and the European Commission regarding Italy's budget policies, sovereign risk premiums have fallen with respect to the peak registered in mid-November, though they remain high; bank CDS premiums have also declined.
The projections indicate slower growth for 2019
This Economic Bulletin presents the macroeconomic projections for the Italian economy for the three years 2019-21. The central projection for GDP growth is 0.6 per cent for this year, 0.9 per cent for 2020 and 1.0 per cent for 2021. These are the central values of a probability distribution which has a particularly large dispersion. Downside risks to growth stem from the possibility of renewed increases in interest rates on government bonds, of a faster deterioration in private sector borrowing conditions and of a sharper drop in firms' propensity to invest. However, the growth rate might actually exceed this projected scenario if sovereign spreads narrow further.
