It remains quite optimistic the International Monetary Fund on Italy, keeping in line with predictions those of other national and supranational economic institutions, which recently also cut its growth forecast. And ‘what is contained in the latest report on the mission in Rome, during which Rishi Goyal, head of mission in Italy of the Fund, also spoke about the reforms and the situation of the banking system.
ESTIMATES – According to the Washington Institute, which has revised downwards its previous estimates, Italy will grow this year “of just under 1%” and in 2017 “around 1%”, compared to 1.1% for 2016 and 1.3% for 2017 and 2018 previously predicted . The recovery should be driven mainly by domestic demand, which is seen in growth of 1.3% over this period, while exports should only accelerate in 2017. Inflation is zero but could give some sign of vitality in 2017 (0.7%), while unemployment should continue to fall, reaching to 10.9% next year.
BREXIT – It ‘also Brexit to affect the downward in addition to the problem of refugees and other uncertain factors such as the volatility of the markets and the slowdown in world trade. “The downside risks have grown up a bit ‘,” reads the document, although Rishi Goyal has specified that the downward revision of the Fund estimates “ is not something that has a direct link with the United Kingdom , which is relatively limited both in commercial terms and on that associated with the exposure of the financial sector. in general it is the increased volatility in financial markets and heightened uncertainty likely to weigh on investment and growth in Italy. structural rigidity longtime and worn bank balance sheets with a high public debt (close to 133% of GDP) leave little room to overcome shock. “
REFORMS – There are, however the good news : the Italian authorities, says the IMF, have “the situation under control, since they are carrying out a very important set of reforms in various areas.” Goyal for “now is the right time to expand and make more effective these reforms in a way that would lead to a package of structural reforms and fiscal measures, pro-growth that can spur growth in the short term.” So doing, concluded the head of mission of the Fund, you can create “tax bearings that make it the most robust growth and can provide more tools or space useful to be able to deal with adverse shocks.”
bANKS – According to Goyal International Monetary Fund the intervention of the Italian government in support of the nation’s banks “is an option under the existing rules.” Goyal explained that EU rules on so-called bail-in provide an “adequate flexibility when financial stability is at risk” and therefore the Bank Recovery and Resolution Directive (Brrd, which transfers the cost of the crisis public sector shareholders and the holders of other bank liabilities) is able to handle the problems related to Italian banks, which among other things the end of 2015 were weighed down by € 360 billion of non-performing loans, ie 18.1% of total loans.
To the representative of the Fund “is at the discretion of the Italian authorities and the European Commission to find a solution in the event that a bank requires a restructuring, which assumes within the framework (of Brrd) some breakdown of costs to support the rescue. ” The point, therefore, for the Fund, is like the European authorities and institutions will discuss the best to find the best solution on this. As for the Npl – of which 210 billion euro of the total calculated by the Fund are in a state of insolvency – the concerns arising “seriously considered by the authorities are justified and taken.”
But, finally, the Fund supports the report, “should not be overestimated because the progress we have been through a series of measures taken by the Italian government.” The institution headed by Christine Lagarde also claims that the Atlas Fund – the tool created in Italy in the private sector to facilitate the recapitalization and management of non-performing loans of banks – “although with relatively modest resources at the time, may prove that buying ‘bad debt’ to a higher price than now offered by specialized investors may in fact produce attractive returns “. According to the IMF, “plus the ground Atlas is successful, more will become possible to collect new resources, creating a virtuous circle.”
RENZI – It is not long in coming, the reaction of President Council after the publication of the revised data: “They reduced all the estimates after Brexit: is a bad thing that there was this result, damage, alas, we hear them with a small slowdown but the impression is that for English will be quite a problem . in the medium term it will do more harm to them than to us. ” So RTL 102.5 Prime Minister Matteo Renzi said the reduction in growth estimates for Italy by the International Monetary Fund, also as a result of Brexit.
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