The cut to Italian growth and the North-South divide, ancient plots in the new territorial scenarios

The cut to Italian growth and the North-South divide, ancient plots in the new territorial scenarios

February 1, 2019

Livia Simongini

The Italian growth downward correction in 2019 affects all the regions, but Prometeia-MIO new scenarios are also influenced by changes in regional time series. What follows is a slower Centre-North and a South bogged down by its structural weaknesses

 

For the Italian regions, economic growth this year is expected more fragile than estimated a few months ago. Various factors have played a role in drawing the new territorial picture. First, the outlook, which takes into account the trends recorded in recent years, includes new regional data [1] referred to the years 2015-2017.

According to the new data, economic growth in 2016-2017 has been corrected upwards for the Centre-North, while the opposite has been done for the South, being the latter hindered by a less favourable performance in construction and services, mainly those connected to public administration.

 
The cut to Italian growth and the North-South divide, ancient plots in the new territorial scenarios
 

Not only is the statistical effect responsible for the outlook changing, but also worse country perspectives triggering different reactions among regions. Disposable income growth, for instance, will not be such as to induce consumption to accelerate because households, especially in the South, will be cautious in their spending decisions.

Furthermore, investments growth will be disappointing everywhere in 2019, but Northern regions will perform better thanks to the stimulus from the external demand. Everything as expected, then: as the exogenous (either national or international) context deteriorates, the North feels the blow better, the South lags behind. This trend, indeed, feeds the geographical divides, putting at risk those attempts to recover which, for instance in the industry sector, have recently affected Southern regions. 

 
The cut to Italian growth and the North-South divide, ancient plots in the new territorial scenarios
 

In a global slowdown phase and facing Italy tight budgetary constraints, the reduction of the North-South disparities needs composite strategies shared by businesses and different levels of government. Yet, the strengthening of investment should be their common feature. 

Between 2007 and 2014, per capita gross fixed capital formation decreased everywhere, but the North lost 30%, the South 40%, with the former recovering faster in the following years. On the other hand, the aforementioned constraints require to use the available resources efficiently, i.e. to introduce well-focused measures both reasonably easy to implement and monitor. Finally, above all, it is necessary to evaluate the effectiveness of the interventions by means of their capacity to promote a long-lasting development of the local economy, leaving aside short-term effects.

 
[1] Istat (2018) Regional Accounts, 13 December
 
 
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