In 2024 Tuscan growth will maintain the weak trend observed in 2023, when the regional GDP recorded a sharp slowdown and was lower than the Italian average, growing by just 0.6% against the Italian 0.9%. Bank of Italy writes this in the usual annual report dedicated to the region’s economyand, adding that for this year the companies surveyed to draw up the study expect a recovery in turnover, but accompanied by a significant cut in investment spending (which follows a reduction already experienced in 2023). The big slowdown
The picture is not comforting, the post-Covid recovery has evaporated. The Tuscan manufacturing sector suffered a decline in production and sales and in 2023 the added value contracted by 1%, just as there was a reduction in real terms of 0.6% in exports, with a more significant fall which concerning the fashion sector. Positive dynamics, however, for the construction sector which experienced a 4% increase in hours worked, probable effect of the various bonuses, albeit slowing down compared to 2022. A more favorable trend concerned the construction of public works, a sector driven by Pnrr funds. A positive sign also for the non-financial services sector, but the increase in added value of 1.6% at constant prices was disappointing compared to the 5.7% of the previous year.
«The first data on the Tuscan GDP for 2024 show a stabilization, therefore we should find ourselves with indicators that are on the same line as in 2023″ said the director of the Florence branch of the Bank of Italy, Vito Barone. In 2023, business profitability was positive for the majority of companies, also thanks to the lower costs incurred for energy, and the hope that this dynamic can be replicated in 2024 is in fact the only positive element.
The situation of families is decidedly complex: it is true that unemployment has fallen further, reaching 5.3%, but according to Bank of Italy this occurred in the face of a shift of work towards sectors with lower wage levels, especially those linked to tourism and hospitality. The “transfer” of workers from manufacturing to services with little added value, combined with the effects of inflation which in 2023 reached above 8%, has led to a csharp reduction in disposable income with an inevitable impact on family consumption. The improvement in the employment rate, of 0.6%, is “undermined” by lower wages compared to Italian levels. Purchasing power fell 0.1% last year, while a negative gross income gap of 3% remained compared to 2019. As a result, consumption grew by 1.4%, compared to 6.7% in 2022.
However, director Barone noted that a slight recovery in the purchasing power of families can be expected «because inflation will go from 5.6% to 1.2% this year, wages have risen slightly in in the meantime. Purchasing power should therefore increase, this could have benefits on consumption.” However, it is difficult to imagine that the impact of inflation on consumption could be disruptiveand, also because in 2024 credit is expected to continue to be scarce and above all expensive, due to the interest rate policies of the European Central Bank.
In 2023, household indebtedness experienced a significant deceleration, going from 5% loan growth in 2022 to just 0.4%. New mortgage disbursements fell significantly, falling in absolute values to 2.8 billion (minus 30%), a figure only partially offset by the expansion of consumer credit. Even worse data is recorded on the business side: financing contracted by 3.6% year on year, a figure that became even more severe in the first quarter of 2024 when loans to companies fell by 4.2%. Credit risk, however, remains stable at minimum levels: in 2023 the deterioration rate rose to 1.3%, with growth of just one tenth of a point.
For 2024, according to Barone it is reasonable to expect one «further reduction in credit to the business system which, although small, appears resilient: despite the decrease in turnover and production, small companies have had significant revenues, therefore profitability is holding up. And to some extent the banking system has been able to better price credit risk, so much so that quality remains at more than acceptable levels. There are some signs of worsening, but at the moment it is nothing to worry about.”
