Italy grows more than Germany despite the stop to the Superbonus: here's why

On the premise that we are always in the presence of 'zero point' increases, the figure recorded by Istat for GDP in the second quarter of 2024 appears encouraging. The increase compared to the previous quarter is 0.2%, and 0.9% in trend terms. The change in the current year, which would be achieved if the economy grew by zero in the next two quarters, is 0.7%. This brings us closer to the estimate contained in April's Defence that sees GDP growing by 1%, a forecast that was deemed optimistic and not shared, albeit by a few decimals, by the main domestic and international forecasters.

In a somewhat unexpected result, the German economy contracted slightly by 0.1 per cent compared to the first quarter of the year, when GDP had increased by 0.2 per cent. This is a sign of a persistent stagnation of the German economy, due to the slowdown in domestic demand, high energy, labour and capital costs. It follows (see the Sole24Ore of 31 July) that companies are delaying their investment decisions, and that the causes of the contraction lie mainly in weak investment in equipment and construction. Germany has long since ceased to be the locomotive of Europe, and this is certainly a fact to take as a starting point for the obvious consequences it is having on the overall performance of the eurozone. According to the leaders of the Ifo index, which is widely followed by the financial markets, the German economy appears to be 'blocked by the crisis'. Even in the third quarter 'no improvement is likely to be expected', especially in the industrial sector. The turning point for the German economy therefore does not seem close, it says, and while there has been a modest expansion in energy-intensive industries, substantial stagnation continues in the rest of the manufacturing sector. The situation on the orders and private consumption recovery front is also not positive.

In comparison with the German economy, Italy's GDP shows greater dynamism as a result - ISTAT notes - of a decrease in added value in the agriculture, forestry and fishing and industrial sectors and an increase in the services sector. On the demand side, there is a positive contribution from the domestic component (gross of inventories) and a negative contribution from the net foreign component. This is the fourth consecutive positive result after the slight decline in Q2 2023. This continuation of the economic expansion phase, albeit slight, is accompanied by a strengthening of the trend growth rate at 0.9%. The dynamism of the tertiary sector is therefore key. In particular, the contribution of the tourism sector stands out. However, it should be emphasised that the effect of the superbonus, which is certainly very heavy on public accounts but which has had a not insignificant influence on the boost to growth, particularly in the construction sector, tends to diminish in the data representing growth. If it is driven by services, the Italian economy is nevertheless showing signs of weakness, particularly with regard to industry, also due to persistently high energy costs. All the more reason to try to sustain growth in the following quarters, while waiting for the decisions that will be taken with the next budget law, especially thanks to the push of the NRP, to which the expectations of GDP growth for the current year are largely entrusted. According to the estimates of the Parliamentary Budget Office, the uncertainty of Italian households and businesses remains high, especially for businesses, which are nevertheless seeing the difficulties in obtaining financing easing.

The latest update contained in the budget settlement shows an increase of 24.7 billion for revenues compared to the initial forecast. The updated budget highlights, in particular, an increase of 16.4 billion, with 8.9 billion in additional Irpef and about 6.5 billion in IRES, while VAT shows a contraction of about 3.2 billion. An upward trend in revenues that had already been recorded by the Bank of Italy: in the first five months of 2024, tax revenues amounted to 206.8 billion, an increase of 7.1% (13.7 billion) compared to the corresponding period of the previous year. 'In the period from January to May 2024,' the Ministry of Economy and Finance announced in turn, 'tax revenues assessed on an accrual basis amounted to €210,784 million (+€18,711 million compared to the same period in 2023, +9.7%). "We are waiting," noted Economy Minister Giancarlo Giorgetti, "for the self-assessment at the end of July. It is important to understand how it goes, when individuals and companies make their balance sheets and find out how much they have to pay in taxes and make their down payments for the following year. We will talk again in August, that is the moment of truth'.

On the other hand, the UBP points out that production in industry has been declining since the end of 2022, and in the March-May average there was a 1.6 per cent drop in output compared to the previous three months. In construction, the production index showed two increases in April and May, although it declined compared to the previous quarter in the March-May average due to the sharp drop in March. "The surveys of companies do not seem to anticipate any short-term (June-July) turnaround in both manufacturing and construction. In the first three months of the year, value added in services returned to growth (0.3 per cent cyclically) after the slight slowdown at the end of 2023. Tourism remains a driving factor for the Italian economy, registering the highest values ever in 2023 and in the first quarter of 2024 a decisive trend growth in the balance of payments for tourism. In the second quarter, the composite index of business confidence declined by about two percentage points and the UPB index on uncertainty recorded a marginal increase'.