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Italian economy shows positive signals, economists unconvinced of
turnaround
ROME, Oct. 6, 2018 (BSS/Xinhua) – The first round of economic indicators
released after the four-month-old Italian government indicated it planned to
depart from European Union guidance on budget matters were mostly positive.
But economists said it would be a mistake to draw any conclusions from the
latest data.
On Friday, Italy’s National Statistics Institute, ISTAT, showed that sales
in August were 2.2 percent better than a year earlier, and discretionary
family income climbed 1.3 percent in the third quarter. The jobless rate
improved slightly, showing 69,000 new jobs in August, and consumer confidence
inched higher.
The positive signals add some strength to predictions from Minister of
Finance Giovanni Tria, who this week worked to assure European investors that
Italy’s 2019 budget plan and its larger-than-expected deficit would spark
enough economic growth to erode government debt in subsequent years.
But economists told Xinhua it was important to keep the economic news in
perspective.
“You can’t draw any conclusions from a monthly snapshot of the economy,”
Silvia Figini, an economist focusing on quantitative methods at the
University of Pavia, said in an interview. “The trend is what is important.
The slight positive signs now could be the start of something but there is no
way to be sure of that.”
Alessandro Polli, an economic statistics professor at Rome’s La Sapienza
University, agreed.
“Italy’s exports are benefitting from the strengthening of the economies
elsewhere in the European Union and in the United States,” Polli told Xinhua.
It is too early to tell how Italy’s budget plan will play out. The
European Union said Italy should work to pay down its debt next year by
keeping its budget deficit below 0.8 percent of the country’s gross domestic
product. Instead, Italy released its budget blueprints with the deficit at
2.4 percent of gross domestic product.
The detailed 2019 budget is scheduled to be released on Oct. 20, and Italy
must seek an OK from European officials. Economists have speculated the two
sides will clash over the budget numbers, with the outcome still unclear.
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Polli said that process could determine whether Italy follows the path of
Portugal, which disregarded European Union guidance on its budget and has
seen higher economic growth, or that of Greece, which did the same and has
seen its economic weaken and become the first country in the 19-nation euro
currency zone to default on debt payments.
Figini said macro-economic figures like those ISTAT tracks can only tell
part of a country’s economic story.
“ISTAT cannot measure things like citizens’ wellbeing and other intangible
areas,” she said.
Some Italian officials say they want to address those issues by using the
extra money from the deficit to pay for an initiative to provide a minimum
basic income for Italian citizens, lower the retirement age, and invest in
infrastructure.
Polli said some indicators in the latest ISTAT report showed the new
initiatives, if enacted, might not have their intended impact.
“The government’s hope is that people will take the money they get from
the minimum basic income and spend it to help drive growth,” Polli said. “But
if you look at the data on the increase in discretionary family income,
families didn’t spend it, they saved it. When there’s economic uncertainty
the general reaction is to save. But that does not spark growth.”
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