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Energy crisis, for Fitch Italy will go into recession in 2023. “Less progress than Germany in reducing gas consumption” & More Latest News Here


Until now, analysts considered it only one possible scenario, but not the most likely. Now Fitchin his latest Outlook, puts pen to paper that in 2023 Italy will end up in recession: GDP should shrink by 0.7% under the weight of expensive energy. Growth expectations for 2022 have been lowered and the economy is now expected to contract in 2023 due to the energy shock, the report reads. “This will have a direct impact on production and the purchasing power of consumers, affecting the private consumption“. Growth will pick up in 2024 with a rebound equal to + 2.6%.

The expense for the gas would leave “fewer resources to spend on other goods and services” and could make “some productions not advantageous, forcing to close”, warns the Outlook, noting that Italy “has done less progress of the Germany in the reduction of gas consumption in response to the drop in supplies “. “Italy, together with Germany, recorded the most strong increases in the retail prices of electricity and gas, equal to approximately 55% per annum in July 2022 ″, it reads. In addition, it is one of the EU states most dependent on gas in terms of its energy mix, with gas that it powers 50% of electricity production compared to 20% of the EU. There Russia supplied 40% of gas imports in 2021, although a rapid diversification of suppliers has begun since the invasion of Ukraine. Even if 80% of Russian gas imports were restored, “the total gas supply would decrease by 5-10%with a direct effect on the production sector “.

Not only that: on the cost front, according to Fitch calculations, in Italy there is a greater increase in gas spending in relation to GDP compared to the other main economies of the eurozone. “Based on the assumption of an average annual gas price of 55 dollars / mcf (1000 cubic feet) in 2023, gas spending of the entire economy could increase to over 5% of GDP in 2023, up to 2 percentage points more than in Germany ”, is explained in the report. “This – it continues – will leave fewer resources for spending on other goods and services. Could make it uneconomical some production, forcing to closures.

In recent days, the rating agency had already cut its estimates on world GDP growth, now forecast for 2022, to 2.4% (-0.5 points compared to last June’s assessment) with a further slowdown to + 1.7% next year, with a cut of 1 percentage point. In the update of the Global Economic Outlook the agency estimated that the Eurozone and the United Kingdom are expected to enter recession by the end of the year while the United States will experience a mild recession in mid-2023. The Eurozone is expected to fall 0.1%, with a downward revision of 2.2 percentage points compared to June, due to the gas crisis and its repercussions on business. For the United States, growth is estimated at 1.7% in 2022 and 0.5% in 2023, revised downwards by 1.2 and 1 percentage point respectively.

The research department of Confcommercioaccording to which “the GDP could mark a mild recession” in the last months of 2022. “The real problems could concern 2023, with a return to a situation of absence of growth, determined by the possible deviation of policies from the path followed in the last 18 months and by the persistence of adverse impulses “. According to the director Mariano Bella, “we could have a strong slowdown in consumption in the second half of the year” and “for us the monthly GDP in terms of economic change in August is slightly negative, in September it will be even more so”. GDP in the first half recorded an increase of 5.5%, so according to the research office “any forecast of around 3 / 3.5% per annum implies a strong slowdown in the second half”, the document reads. “In cyclical terms this can lead to a moderate recession (two consecutive negative percentage changes; in our view of modest entity) “.

Energy crisis, for Fitch Italy will go into recession in 2023. “Less progress than Germany in reducing gas consumption”
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