The CSC (Confindustria Study Center)’s research, presented on 27 March, contains believable forecasts (but not entirely) and very contradictory proposals among them.
PLEASE NOTE: Confindustria is the General Confederation of Italian Industry, it is the Italian employers’ federation and national chamber of commerce, founded in 1910. It aims to help Italy’s economy growth, assisting, in doing so, its members.
The former: a 2019 in the best-case scenario weak (due to a sharp decline in domestic demand); export growth in line with the general trend and, therefore, not very positive although it seems the only non-disastrous indicator; failure to improve the debt ratio to the extent that foreign market confidence deteriorates or that interest rates rise.
The latter: under certain conditions, exports would be the only antidote to the decline in domestic demand; government choices (RdC and quota 100) although having a positive effect on domestic demand, have seen a weakening of public investment as a structural factor.
So, if exports are affected by the international economic situation, it is logical that they cannot be the driving force to the recovery (even Cina, for various reasons, is facing this situation and therefore it relies more on the internal growth, which does not mean that this Country abandons the international trade).
What makes the domestic demand stronger when private individuals do not invest because there are no recovery perspectives: 1) replacing the imports; 2) the public expenditure
EU driven-policies, since before the introduction of the Euro, have been deflated precisely because they only focused on the export (which is a non-sense, considering that every country cannot see its exports increase) at the cost of reducing, as happened, salaries and employment. Other Central-Northern European Countries have compensated that policy by keeping under the public control many more productions and services than the respectful Italians have done: and this is what causes the greatest slowdown of our economy compared to the other EU Countries. Even in a Europe that has self-inflicted the penance (obviously, exacerbating the differences between the social classes and shifting greater suffering to the more subordinate ones).
The exports needed are those with high added value: most exporters of raw materials and semi-finished products remain poor; The wealth of nations lies in the transformation or in the amount of intelligence incorporated in goods and services. From this point of view, Italy is not bad at all; however, it is important to reiterate that the export should not be at the expense of labour, but, on the contrary, under conditions of exploitation of labour. We will come back rich when we know how to value, with our intelligence, preparation, culture, artistic sensibility and scientific abilities, the most important of our exports or the trinomio between tourism, cultural heritage and agro-food industry.
There is also the substitution of imports, that is a change of model in which, differently from the actual one, it is not necessary to kill the neighbor, but countries export only the surpluses: through this model, the country gives value to the local products (also by using additional coins that give the consumer loyalty to the territory and boost internal employment).
In this way, the local market is saturated and surpluses are exported at an arbitrary price, that is, the international one. So, the country becomes competitive, but without being devastated or having to devastate its neighbors. On the contrary, the neighbors will do the same too and, in the end, the model would be sustainable with all balances.
The deficit government expenditure increases debt (with two exceptions that we will see soon): the bet is the multiplier effect of expenditure itself compared to GDP, whether the induced increase will have a less effect on the debt (which, however, will increase).
The two exceptions (which are linked to the possibility of increasing public expenditure without creating additional debt): 1) to meet the needs of the State with negative interest rate securities (or intensify the number of short-term securities sales) until the phenomenon; abnormal, but linked to the management of liquidity by banks that get rid of toxic securities and injure credit to the real economy persists; 2) issue and inject government currency not in debt and only in national circulation (which is not dealt with by European legislation).
Finally, amazes that Confindustria persists not to consider the effect of the economy. Banks injure credit because they apply ratings that penalize small businesses and craftsmen (in Germany it is quite different and we should look at the non-speculative banks there; the big ones, however, are worse off than ours, but they buy government bonds at extraordinarily low or, as we said, negative rates).
Of course, many of the Italian perspectives of 2019 are linked to the functioning of the two main measures of economic policy of the government: but we do not see why even the small redistribution of income (largely obtained by shifting public resources already collected) should not have a positive impact on GDP as well as a less restrictive pension scheme than the previous one; more important, perhaps, it will be, in the coming months, the ability of the administrative machine to return, to various investments and sustainable infrastructure, tens of billions “suspended”. In the regional budgets and not only that full cooperation of the and with the so-called bureaucracy can restore to their function. It goes without saying that 50-60 billion would make a difference and perhaps constitute the real “ace in the hole” of the current government.