The state of Italian economy 2016 – straight from the state

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Bank of Italy, the central bank governing monetary policies of Italy, releases an annual report in English each year. In this report, you can find very detailed description of the state of economy in charts. Although it is widely assumed and accepted that 20 to 40% of Italy’s real economy is unreported, hidden away from the view of the authority; still, the majority of the economic activities are captured by economists, which makes a useful picture of the health and trend of Italy’s economy. What is the official unemployment rate for different age groups? What is the trend of the housing market? Here are some snapshots from 2016’s report:

Employment

The number of people employed officially remained more or less the same as 2009, around 22.6 million, after experiencing a small decline between 2012 and 2015. However, the unemployment rate is higher than it was in 2010, around 11.6%. Despite of the government’s effort, “lavoro in nero” (working in black) is still very common, and these don’t factor into this type of chart.

Italy unemployment and labor rate 2016

House Price

House prices experienced a steady climb from 2000 until the height of the global financial crisis in 2008 and began to decrease. Still, the current price is at least 25% higher than the beginning of this millennium. However, the number of sales dropped precipitously since its peak in 2007. In 2016 it is still 55 points below the peak, despite the 25% lower price.
In certain unbar markets such as Rome and Milan, the house prices remain high, even after a slight decline. However, over all, Italy is currently a buyer’s market. The inventory moves slowly, at a lower price.

House price real estate Italy 2016 chart

Interest Rates

Interest rates too hit a peak around 2007 of nearly 6%, and now the rate of home loan is below 2.5% while commercial loan to businesses is below 2%. This tracks the EU rate closely.

Interest rate 2016 Italy chart

Bank Lending to Private Sector

Bank lending to the private sector really dried up, hitting an all-time low in 2013, and recovered slightly in 2016. The current lending rate is far below that of more than a decade ago. Many small and medium size businesses have been closing; while other medium to big businesses have been bought out by foreign investors. The Seven Wonders of Italy already bought by the Chinese http://www.corriere.it/english/cards/the-seven-wonders-of-italy-already-bought-by-the-chinese/pirelli-group_principale.shtml This group includes: Pirelli Group, CDP Rete (natural gas), Ansaldo Energia, Olio Sagra, Ferretti Yachts, In Front Sports & Media (football), and Krizia (fashion house).

Bank lending Italy 2016 chart

Credit access froze up as well.

Credit access for businesses Italy 2016 chart

Inflation

Consumer price inflation is low in 2016 after hitting nearly 4% in 2007 and 2011. Apart from the low inflation, wage is stagnant and the domestic economy (GDP) and household consumption has been on a steady decline since 2007, stabilizing from 2012 to 2016.

Consumer price inflation Italy 2016 chart

GDP

What is more worrying that the slight decline in GDP and household consumption is the Gross Fixed Investment that has dropped 30% and did not recover since 2007.

Italy GDP and gross investment 2016

Exports

One positive element of the Italian economy is in its export; exports to both E. U. and non-E. U. countries have been increasing steadily since 2009.

Italy exports chart 2016

Source: Bank of Italy, Annual Reports 2016.

 

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