Economic Bulletin no. 3, July 2015

An agreement with Greece was concluded on 13 July

Financial market conditions, which had been affected by the uncertainty over the outcome of the negotiations with Greece’s international creditors, improved. In the euro area, monetary expansion continues to sustain the economic recovery and price dynamics. The Governing Council of the ECB is determined to counter any unwarranted tightening of monetary conditions. In Italy the gradual recovery in economic activity continues, led by domestic demand. The latest cyclical indicators suggest the continuation of growth in the second quarter at about the same pace as the first. Employment returned to growth in April-May. The unemployment rate stabilized. Since the start of the year the share of new permanent hires has risen significantly.

The monetary expansion is feeding through to credit conditions

The fall in the cost of loans to firms has continued and has now spread beyond the most creditworthy companies. SMEs too are reporting easier access to finance. Lending to manufacturing industry and to households has begun to expand again. Speeding up the process of disposing of non-performing loans would help to strengthen credit dynamics.

The economic recovery in Italy will be consolidated over the next two years

Our projections indicate the gradual strengthening of growth, which will still be limited this year but faster in 2016, thanks to a recovery in investment, which has been expanding since the start of the year. The projections assume the continuing effects of monetary stimulus and of the normalization of credit conditions.