The HIS Markit global survey published on Monday suggests that Italy’s business confidence got a boost in the second quarter of 2019, even as the Eurozone’s economic fundamentals are worse.
Overall, the Italian economy saw negative growth of minus 0,1% in the first quarter and may yet see further contraction in the second; the official government projection is 0,2% growth for 2019.
Nonetheless, 29% of business managers surveyed by HIS Markit expect to see growth in the coming months, compared to only 23% in the first quarter. The picture was more or less balanced in both manufacturing (28%) and services (+30%).
Increased confidence appears to be founded on an expectation of tax cuts, improving credit conditions, and a rebound in international orders. Italian unemployment has also dropped to single digits (9,9%), while Italian bond yields dropped in July to their lowest point since 2016.
Political instability weighs less heavily on Italian business confidence, as Rome has come to an understanding with the European Commission over budgetary policy, agreeing to fiscal consolidation measures of €7,6bn, which should maintain the deficit to 2,04%.
“The doubts unduly spread about our government’s policy coherence with the framework of European rules have been dispelled,” Economy Minister Giovanni Tria said on Friday.