The three black swans - Energy, inflation and economic growth
Autumn 2022 and 2023 present Italian business owners with a scenario that would make anyone's hands shake, because there is no shortage of reasons to worry. In this article we will look at the current scenarios and how they might develop, for better or worse, based on the information avail
Autumn 2022 and 2023 present Italian business owners with a scenario that would make anyone's hands shake, because there is no shortage of reasons to worry.
In this article we will look at the current scenarios and how they might develop, for better or worse, based on the information available today.
1. The price of motive power (energy).
The first is certainly the price of motive power: the energy that is essential to keep manufacturers, distributors, large-scale retail and shops alive.
There are essentially two reasons behind this rise in energy costs. The first is linked to the restart of economic activity after the shutdowns imposed by the Covid-19 pandemic. The jump in demand for electricity after a period of standstill also brought a jump in its price.
The other reason is an indirect consequence of Russia's invasion of Ukraine. Moscow is the main supplier of gas to Europe in general and to Italy in particular.
Even so, there is light at the end of the tunnel: at the end of September gas prices fell in Italy and the country became an exporter of gas to the rest of Europe. This could be excellent news for our bills, provided it holds for the whole autumn.
There is also a great abundance of gas at the moment, and relatively little of it is being used. The causes are many. Storage is now 90% full and can be drawn on if needed, steadying the market.
Most importantly, thanks to the agreements made by the Draghi government, two thirds of Russian gas has been replaced by Algerian gas, gas arriving by ship and alternative suppliers such as Norway and Azerbaijan (the TAP pipeline, which reaches the coast of Puglia from the Caucasus, will rise to 9.5 billion cubic metres at the end of the year against 7.5 in 2021).
2. Inflation
Prices have started rising again almost everywhere in the world, after the end of the pandemic and the injection of huge amounts of money by central banks, reaching record peaks.
A study by the Pew Research Center shows that among advanced economies, 37 have at least doubled their inflation rate in 2022 compared with early 2020.
The world's main economies (the euro area, sterling and the dollar) are recording an unprecedented inflation rate of between 8% and 10%.
One of the problems with inflation is that it hits the rich and the less well-off differently. The two groups buy very different goods and services from the basket. Poorer people, for example, concentrate more of their spending on energy and food, products they can hardly do without: you cannot stop heating your home, using water or eating. According to Istat, in this phase of the economy the poorest fifth of households is facing higher inflation than the rest of Italian families.
In its Economic Bulletin last July, the Bank of Italy estimated that the measures taken by the government to ease the burden of higher energy prices had almost halved the impact of the inflationary shock on the lowest-income households.
Here too, as with the price of energy, inflation is expected to slow in 2023 to an average of 3.5%. The estimate is in the report on Italy drawn up by inspectors from the International Monetary Fund at the end of their annual mission.
3. Growth, stagnation or recession?
After two years of economic recovery in Italy, with GDP up 6.7% in 2021 and forecast up 3.3% in 2022 (outgoing prime minister Draghi, more optimistic, talks of 4%), which allowed a full recovery (and more) from the collapse of 2020, in 2023 the world economy and the Italian one will be on the verge of no growth at all.
For 2023 the Italian forecasts point to GDP growth of 0.6% (against the 3% forecast in April 2022), followed by 1.8% in 2024 and 1.5% in 2025.
Certainly not an easy scenario to manage for the new Meloni government, which has just been sworn in at the Quirinale before the President of the Republic.
P.S. : We will discuss this and more in Scenari 2023, an in-depth webinar on the situation that Italian business owners and SMEs will face this winter and in 2023 , with plenty of food for thought on how best to handle a difficult period.
The webinar will take place at 10:00 on Saturday 12 November, and is led by Matteo Rivolta , founder of Luxury Academy and chairman of RiFRA, a company that manufactures and distributes high-end kitchens, with guest Dario Fabbri , editor of the geopolitics magazine Domino.
One live webinar a month.
One topic, questions from the business owners who join, answers without sales slides. It's free and in Italian, and it's the simplest way to get to know us.
See the next webinar →