German industrial production in March recorded a decrease of 0.4% compared to February, a month in which there was instead a monthly increase of 1.7%. The decline was smaller than expected (-0.6%). Retail sales in Italy, in the same month, remained stationary in value compared to February with a slight decline in volume (-0.1%). We asked for comment on these two macroeconomic data released yesterday at Marco Fortisdirector of the Edison Foundation and professor of Industrial Economics at the Catholic University of Milan.
Let’s start with German industrial production. How should we judge this decline in March which comes after a rise in February?
I think it is useful to look at the overall data for the first quarter, which speaks of an increase of 1% compared to the last three months of 2023. It is a positive change, but the decline recorded in March tells us that the situation is still very uncertain.
Is it still early, then, to talk about a restart in Germany?
Yes, despite Germany’s GDP grew by 0.2% in the first quarter, we must not forget the fact that there was a downward revision (from -0.3% to -0.5%) for the last quarter of 2023. In fact that correction has been recovered, there can be no question of an exit from the crisis. Also because if we compare the first quarter with the second of 2023 we see that the German GDP is at -0.1%, while the Italian one is at +0.8%.
Given the existing interconnections between the manufacturing of the two countries, what does the data tell us about German industrial production compared to Italy?
There seems to have been a slight recovery in the German automotive industry and this could be a good thing for the related industries which also involve northern Italy. Unfortunately, at the moment all of Northern Europe, not just Germany, is at a standstill and this does not favor the growth of our exports.
What do you think, however, of the data on Italian retail trade for March?
Compared to a year ago there is growth both in value (+2%) and in volume (+0.3%), while in the first quarter, in economic terms, there is a decline in volume (-0.4 %) and a stasis in value. They are data, therefore, to be taken with great caution, also because they do not concern all trade. It seems to me that in any case a stability in consumption emerges that has not existed either in France or in Germany. Overall, among the G7 countries the United States is doing well, while the others are all more or less at a standstill, except for Canada and Italy which are growing a little.
All in all, therefore, the Italian economy is not doing badly…
The PMI index for April relating to construction was unfortunately negative, which means that the “relay” between Superbonus and Pnrr investments has not yet managed to start. Despite this, the growth achieved in Italy after the first quarter was +0.5%, while in Germany it was -0.1%. Furthermore, if we take last week’s latest OECD forecasts at face value, between 2019 and 2025 among the G7 countries the USA will grow by 12.4%, Canada by 7.9% and Italy by 5.4%. %, the United Kingdom by 3.7%, France by 3.4%, Japan by 3.2% and Germany by 2.1%. There have been changes both in the social structure and in the competitiveness of the economic system which explain why in a world that is at a standstill we grow a little more than others.
What social changes are you referring to?
The other day Istat told us that in 2023 the population at risk of poverty and social exclusion has decreased. In fact, compared to 2015 in our country the number of people in this social condition decreased by 5.6%, while in Spain by 2.2%. Perhaps what not everyone knows is that they grew by 1.2% in Germany and 2.6% in France, although in the latter case the data goes up to 2022.
Meanwhile, at the general states of accountants it was highlighted that the real tax burden in Italy is around 47%. The Government is thinking about relief for the middle class. What do you think?
I think there are not enough resources for this type of relief, unless new flexibility is renegotiated with Europe as Padoan did. Then, as soon as we emerged from austerity, there was space, and it was well used, especially with Industry 4.0, to lay the foundations for the growth we are still seeing. Today we can try to maintain cruising speed, I think that is the maximum that our country can afford at the moment. Perhaps the Pnrr could make the difference if it is implemented quickly and well.
(Lorenzo Torrisi)
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