Economy

Meloni’s first anniversary as Italy PM marred by economy, family split

Published

1 year ago

October 22, 2023

ROME, Oct 22 (Reuters) – Weak economic growth and high interest on the country’s huge debt are the main problems facing Italian Prime Minister Giorgia Meloni after her first year in power, an anniversary marked by an abrupt announcement she was leaving her long-time partner.

Meloni’s coalition, the first led by a woman in Italy’s history, was sworn in a year ago after a sweeping election victory and will soon cruise past the 14-month average postwar term life for Italian governments.

It was seen on taking power as the country’s most right-wing since wartime dictator Benito Mussolini, as Meloni’s Brothers of Italy party traces its roots to the post-fascist Italian Social Movement (MSI).

Yet Meloni, 46, set about quelling foreign concerns of possible extremism, forging good ties with allies by adopting a strongly pro-Western, EU-friendly stance and pledging staunch support to Ukraine in its war with Russia.

At home she pleased her rightist grassroots through measures to defend the traditional family, protect Italy’s cultural heritage and try to stem migrant arrivals.

“We have worked tirelessly to repay the trust and to demonstrate with facts that it was possible to build a different Italy,” she said in a video message this week.

However, an economic rebound from the COVID-19 pandemic has ground to a halt, with gross domestic product contracting by 0.4% in the second quarter, and analysts forecast Italian growth will be among the lowest in the euro zone next year.

That makes it harder for Meloni to keep her tax-cutting promises and makes Italy’s debt, equal to 140% of national output, vulnerable to market sell-offs.

“The economy is probably the toughest subject. The government has low margins in which to operate,” said Valentina Meliciani, an economics professor at LUISS university in Rome.

Last week Meloni weathered the first of several reviews on Italy’s debt when S&P Global Ratings confirmed the country’s BBB rating with a stable outlook.

However, the prevailing view among analysts is that the rating agencies will worsen Rome’s outlook while avoiding outright downgrades.

Meloni also has personal problems to deal with. She announced on Friday she was separating from her long-time partner, TV presenter Andrea Giambruno, after he repeatedly sparked outrage for sexist comments made on and off-air.

TAX CUTS

This month the government approved a 2024 budget with around 24 billion euros ($25.3 billion) of tax cuts and increased spending, despite a public debt that is proportionally the second highest in the euro zone after Greece’s.

The budget has not impressed investors, and exacerbated a long-running rise in Italian bond spreads.

The gap between yields on Italian 10-year bonds and the German equivalent is hovering around 2 percentage points (200 basis points), far higher than for any other euro zone country.

Meliciani said Italy’s hopes of reviving its economy and cutting debt were strongly dependent on effective implementation of investment plans financed through EU post-COVID funds.

So far Rome has struggled to meet Brussels’ policy conditions and to spend the money it has received.

On the international front, as well as her backing for Ukraine Meloni has largely avoided confrontation with Brussels despite her eurosceptic past.

She has also dropped the calls she used to make in opposition for a naval blockade to prevent boats leaving north Africa, despite her inability to halt the influx of migrants.

Arrivals on Italy’s coasts have surged to more than 140,000 so far in 2023, nearly double the same period last year.

“We expected Italy to be very tough (on immigration) at the EU level but we have seen a conciliatory attitude overall, they are working to find a common line,” said Enzo Moavero Milanesi, a former foreign affairs minister.

COMMANDING POSITION

At home Meloni has so far avoided the domestic political chaos that dogged so many of her predecessors.

A divided opposition has helped her tighten her grip on power and keep her party at the top of the polls, with nearly 30% of voter support, against around 18.5% for the centre-left Democratic Party (PD) and 17% for the maverick 5-Star Movement.

Her party dominates its coalition allies, the League and Forza Italia, whose combined score remains below 20%.

Analysts believe a slice of centre-right voters switched to Meloni from the other two parties and are unlikely to shake the balance of power within the coalition by changing back again.

“Meloni came after a decade of political instability and voters floating across the party spectrum. The country looks now tired of this,” said historian and politics expert Giovanni Orsina.
($1 = 0.9476 euros)

Archbishop of Canterbury Justin Welby meets with the parents and extended family of 22-year-old Yosef Malachi, who was killed in Kibbutz Kfar Aza following a deadly infiltration by Hamas gunmen, at the King David Hotel in Jerusalem

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Economy

Trump’s victory sparks concerns over ripple effect on Canadian economy

Published

14 hours ago

November 6, 2024

Anne Joseph

As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.

Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.

A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.

More than 77 per cent of Canadian exports go to the U.S.

Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.

“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.

“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”

American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.

It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.

“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.

“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”

A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.

Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.

“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.

Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.

With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”

“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.

“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”

This report by The Canadian Press was first published Nov. 6, 2024.

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Economy

September merchandise trade deficit narrows to $1.3 billion: Statistics Canada

Published

2 days ago

November 5, 2024

Anne Joseph

OTTAWA – Statistics Canada says the country’s merchandise trade deficit narrowed to $1.3 billion in September as imports fell more than exports.

The result compared with a revised deficit of $1.5 billion for August. The initial estimate for August released last month had shown a deficit of $1.1 billion.

Statistics Canada says the results for September came as total exports edged down 0.1 per cent to $63.9 billion.

Exports of metal and non-metallic mineral products fell 5.4 per cent as exports of unwrought gold, silver, and platinum group metals, and their alloys, decreased 15.4 per cent. Exports of energy products dropped 2.6 per cent as lower prices weighed on crude oil exports.

Meanwhile, imports for September fell 0.4 per cent to $65.1 billion as imports of metal and non-metallic mineral products dropped 12.7 per cent.

In volume terms, total exports rose 1.4 per cent in September while total imports were essentially unchanged in September.

This report by The Canadian Press was first published Nov. 5, 2024.

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