Summary
Since the start of the COVID-19 crisis, the Italian economy has been hit by shocks whose effects have been similar across the country. In 2021, most of the previous year's exceptional contraction in GDP was reabsorbed, thanks to the improvement in the healthcare situation and to the gradual easing of restrictions, following the progress in the vaccination campaigns; the recovery was slightly more pronounced in Central and Northern Italy. According to the Bank of Italy's quarterly indicator of regional economic activity (ITER), economic growth continued in the first half of 2022 in all areas of the country. The latest data show widespread signs of a slowdown. Inflation has risen sharply, with stronger purchasing power losses in the North East and in the South. Businesses expect sales to weaken over the next six months. The higher production costs due to the increase in energy prices have been transferred to sales prices. Households' income and consumption expectations over the next twelve months have worsened everywhere. Employment slowed down in the summer, mainly in the southern regions. The growth in mortgages has remained strong everywhere, especially in the North; consumer credit has increased. Loans to businesses have accelerated in the central and northern regions. Banks' criteria for loans to firms have become more prudent. The share of non-performing loans has remained low everywhere. Local government accounts have improved, and public investment has risen.
