Economic Bulletin No. 2, April 2016

15 April 2016

The expansionary stance of monetary policy has intensified in the euro area

Concerns about the global outlook triggered price decreases on international financial markets in the early months of this year, which have since been reabsorbed to some degree. In the euro area the risks to growth and inflation have increased. The ECB’s Governing Council has introduced a substantial package of expansionary measures over and above what observers expected.

The recovery in Italy continues, albeit at a more modest pace

In Italy, the upturn is driven by consumption and investment; firms are still optimistic about the outlook for the coming months, although they show signs of caution. Meanwhile, the outlook for foreign demand reflects increased uncertainty about world trade. Growth will be modest again in the first quarter of this year, but slightly stronger than in the previous three months. Inflation is back in negative territory, reflecting among other things the ample slack in the labour market.

Lending is improving, non-performing loans cease to grow

The gradual strengthening of lending proceeds, aided by monetary policy measures; loans to manufacturing firms are growing at rates of over 3 per cent. As the recovery progresses, there are growing signs of improvement in credit quality; for the first time since the outbreak of the financial crisis the value of non-performing loans in absolute terms has fallen.

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