Italian economy is on track and expects a solid growth rate due to the following business environment of the economy, according to Barclays Research:
– Consumer and business confidence data suggest the pace of GDP expansion is likely to remain similar to Q1 (+0.3% q/q). Private consumption should continue to benefit from low inflation, improving labour market and lending conditions and maintenance of the current neutral fiscal policy stance.
– Meanwhile, exports are expected to resume, fuelled by a weak euro and strengthening of global demand, including from the US economy (which absorbs about 20% of Italian exports outside the EU).
– The latest set of labour market data shows the reform approved by the government at the beginning of March has already started to produce positive effects.
– The unemployment rate was unchanged at 12.4% (Feb-May), but open-ended labour contracts have increased significantly; the number of fixed-term contract activations eased. Moreover, the government is likely to stay put on structural reforms, at least on those which are receiving a parliament reading.
– The economy continues to benefit from tailwinds consistent with GDP expanding 0.8% this year and 1.4% next year, the bank estimates. Risks are broadly balanced, but should the situation in Greece precipitate, private sector confidence may retrench from current levels.