Svimez Report

Mezzogiorno: GDP grows more than in the Centre-North regions. Competition to take credit

The Svimez Report: +1.3% in 2023 against +0.9 of the national average. The South also grew more in the five-year period 2019-2023. But the distance between the two areas of the country is still wide

by Gi.Ch.

20 June 2024

5' min read

Key points

Public works flywheel, weakness of the business fabric
Tourism
Whites: "This is not an isolated incident"
Who deserves the credit?

5' min read

In 2023 the GDP in Southern Italy (+1.3%) grew more than the national average (+0.9%). This is the Svimez estimate that emphasises how equally favourable the employment dynamic was. Employment in Southern Italy increased by 2.6% year-on-year, more than in the other macro-areas and compared to a national average of +1.8%. Growth was significantly affected by the NRP, with public investments growing by 16.8% in the South in 2023, against +7.2% in the Centre-North. In the southern regions as a whole, investments in public works grew from 8.7 to 13 billion between 2022 and 2023 (+50.1% against +37.6% in the Centre-North). A dynamic on which the gradual advancement of NRP investments and the acceleration of expenditure of European cohesion funds in the closing phase of the 2014-2020 programming cycle should have had a significant impact, given that that of the 21-27 period is still substantially at a standstill.

The flywheel of public works, the weakness of the entrepreneurial fabric

Operating in a context in which construction contributes significantly more to the formation of value added, investments in public works have generated more intense expansionary effects in the South. In particular, Svimez estimates a contribution of higher expenditure in public investments (Pnrr and other investments) to GDP growth in southern Italy in 2023 equal to about half a percentage point (about 40 per cent of overall growth). Conversely, public spending on business incentives grew by 16% in the South, ten percentage points less than in the Centre-North (+26.4%). This differential reflects the lower capacity of the southern production fabric, characterised by a smaller presence of larger companies, to absorb the 'on-demand' incentive measures for technological and digital modernisation financed by the NRP.

Tourism

The services sector also contributed significantly to the growth of southern GDP: +1.8% increase in added value. Two factors influenced the figure for the South. Firstly, the relatively higher growth of certain activities closely linked to the expansion of the business cycle, such as transport and communications. In addition, in 2023, the growth in tourist arrivals was about one percentage point more accentuated in the central-northern area (+8.5% in the South, +9.7% in the Centre-North), but in the South the growth in foreign arrivals was more pronounced, with which significantly higher levels of tourist spending are associated.

Whites: 'This is not an isolated incident'

The GDP growth of 1.3% in the South in 2023, above the national average (+0.9%) "is an important fact: a stronger growth in the South compared to the rest of the country had not happened for many years and it is not an isolated fact because it follows the whole post-Covid recovery phase, when the South had grown like the Centre and the North, contrary to previous crises," explained Luca Bianchi, Svimez director general, commenting on the report. "This happened because of the different intonation of the more expansive policies that certainly created the conditions for an extended recovery for the South of Italy". Bianchi highlighted two aspects: "On the one hand, the southern industry's export performance is better than that of the central north, because the north suffers more deeply from the impact of the German crisis and European manufacturing, while the south shows good dynamics in other sectors. And then there is the significant contribution of the growth in public investments, because public works expenditure has grown almost 50% more. This phenomenon is due to two elements: there is beginning to be some spending by the NRP, which is proving to be fundamental for activating the growth path, and investments by the cohesion funds'. In general, what emerges is that 'a Southern policy focused on investments can have an accelerating effect'.

Who deserves the credit?

Once the report was published, the race was on to take credit for this result, which in any case is not the cancellation of the historical gap separating the South from the Centre-North. "The 2023 data on GDP growth, released by Svimez, highlight the concrete change of pace in the economic and employment growth of the southern regions," the minister for European Affairs, the South, Cohesion Policies and the Pnrr Raffaele Fitto hastened to declare. "For the first time since 2015, the Mezzogiorno has recorded a higher growth rate than the rest of the country, with GDP estimated at 1.3% compared to the national average of 0.9% and, above all, with an increase in new jobs of 2.6%, compared to a national average of 1.8%. These are encouraging numbers, which confirm the effective roadmap undertaken by the Meloni government in the planning of strategic interventions for the development and growth of southern Italy, also highlighted by the data on investments in public works, which in 2023 in the southern regions recorded an increase of more than 50%, growing from 8.7 billion to 13 billion euro". To tell the truth, the greater dynamism identified by Svimez in southern Italy does not only regard 2023: broadening the look to the period 2019-2023, the cumulative growth of the southern regions was 3.7% compared to 3.4% in the North-West and double the +1.7% of the central regions.

"The report," Minister Fitto emphasises, "shows that this result is due to the implementation of the NRP and the completion of the spending of the investment programmes of the 2014-2020 programming cycle. In this direction, the effectiveness of the reforms implemented by the government is confirmed, which has updated the governance of the NRP, reformed the national cohesion policies, the establishment of the single southern Italy SEZ, and the reform of the cohesion policies included in the NRP. In this framework, therefore, we will continue with national resources and those of the structural funds to support public investments needed to increase the quality and quality of services in the areas of southern Italy also in order to attract more private investment'. Fitto, however, cannot fail to be aware that at the end of the programming period (2014-2020), structural fund spending undergoes a physiological acceleration, just as it struggled to take off in the early years.

The president of Azione, Mara Carfagna, minister for the South before Fitto, in the Draghi government, is also calling for recognition of her merits: "Svimez estimates on the GDP of southern Italy, which in 2023 will have grown more than in the rest of the country, confirm the goodness of the approach given to development policies for the South with the Draghi government. The strategic decision to allocate at least 40 per cent of the NRP resources to the South, the public investment plan launched thanks to the same NRP and other European and national funds, the reform and strengthening of the SEZs, and the Institutional Development Contracts signed have evidently worked. It means that we have sown well, that the planning and programming work we have done has borne fruit that is maturing over time'. Then, in reply to Fitto and other members of the current majority, he added: 'The government does not lose the habit of taking credit for things it does not have, that it cannot have. Attributing growth above the national average of the South's GDP in 2023 to its own reforms is not serious and not honest, because these reforms were only approved in 2023 and 2024 and we have never seen interventions on development policies with immediate or even retroactive effects'. He adds: 'Svimez data say, if anything, that the growth of southern Italy was due to the advancement of investments in public works decided and carried out by previous governments. But on the day when the majority is celebrating the approval of Calderoli's autonomy, a diversion was evidently needed, a way to try to distract the southern citizens on the risks of a reform that goes against the South and that the South does not want. Smoke in the eyes in short,' Carfagna concludes, 'even more serious and unacceptable than recognising the power to work miracles.