Global growth strengthens
The outlook for world economic growth remains favourable; international trade, which is reviving, looks set to expand at a pace exceeding that of GDP. In the euro area, economic growth has also intensified, but inflation continues to be curbed by sluggish wage growth in many of the economies along with ample margins of underutilization of labour. The Governing Council of the ECB believes that a very substantial degree of monetary accommodation is still needed.
In Italy, the economy gained strength in the summer, buoyed by domestic demand
According to our estimates, Italy’s GDP rose in the third quarter at a faster pace than in the second quarter, thanks to the expansion in the service sector and in non-construction industry. The economic indicators suggest that the expansion in output continues to be buoyed by consumption and investment. The current account surplus increased, helping to quickly reduce Italy’s net international debtor position. The growth in employment continued through the summer and the number of persons employed almost returned to pre-crisis levels, although the number of hours worked is still lower than before the crisis.
The improved macroeconomic conditions have positive effects on the banking system
Lending to the non-financial private sector grew, driven by loans to households and to industrial and service firms. As economic growth has strengthened, the non-performing loan rate has returned to a level in line with that preceding the financial crisis and the reduction in the ratio of non-performing loans to total loans has gained pace. Favourable signs of economic growth, good corporate earnings, and the marked easing of tensions in the banking sector are reflected in Italian bank share prices, which have risen more than the Italian stock market and the shares of other European banks.
