Italy: Little to cheer in 2017 – BNPP

Analysts at BNP Paribas expect Italy’s economic growth to slow to 0.4% in 2017 from 0.8% this year.

Key Quotes

“With nominal wages slowing and employment moderating, consumption is likely to remain lacklustre. Tensions in the banking sector might curb credit growth and investment.”

“Core inflation is lower in Italy than in the other ‘big four’ eurozone economies. The large amount of spare capacity and low inflation expectations should keep downward pressure on wages and limit any upward pressure on core inflation.”

“Market-perceived fears of political uncertainty ahead of the constitutional referendum on 4 December have translated into higher yields and wider spreads. Higher risk premia may hamper investment and growth.”

“Contrary to the consensus, we see growth moderating next year, as a result of less fiscal expansion, fading benefits from lower energy prices on disposable income and more sluggish credit due to troubles in the banking sector.”