The global economy continues to benefit from the effects of the vaccination campaign and the expansionary policies of monetary and fiscal authorities. However, signs of a slowdown have emerged in the last few months owing to supply bottlenecks that, together with the increase in commodity and energy product prices, are also causing more persistent than expected price pressures. On the financial markets, the sovereign spreads of some euro-area countries recorded a marked increase between the end of October and the start of November, in connection with fears about a possible reduction in monetary accommodation.
In Italy, the risks to financial stability are moderate; medium-term vulnerabilities persist, connected above all with the possibility that economic growth, which is currently solid, may lose momentum. The Eurosystem's public and private sector securities purchase programmes are helping to keep financing conditions relaxed, including in the government bond market.
The risks connected with the financial situation of households remain limited overall. The cyclical improvement and the support measures have translated into overall growth in saving and financial wealth, though it is uneven across the various categories of families.
The upturn in profitability, the abundant liquidity accumulated during the pandemic and the favourable financing conditions are all contributing to a significant improvement in firms' balance sheets. Risks could stem from changes in the economic situation and in firms' profitability that are less favourable than currently anticipated.
The banks' new non-performing loan rate is stable, at historically low levels, and the disposal of non-performing loans continues. Nevertheless, performing loans classified as forborne exposures have increased, above all among borrowers that have benefited from debt moratoriums. It is important for banks to be particularly prudent when assessing the repayment capacity of debtors and in their subsequent decisions on provisioning. Banks' profitability improved considerably in the first half of the year, mainly owing to the fall in loan loss provisions. Capitalization fell slightly and should not be significantly affected by the resumption of the payment of dividends tied to the lapsing of the recommendations issued by the supervisory authorities, which had limited dividend distribution during the public health emergency.
The insurance sector has returned to pre-pandemic conditions. The positive trend in net subscriptions of investment funds continues and the risks to financial stability from this sector remain low.