Matteo Dell’Acqua never thought Italy’s rebound from Covid would be this good.
The 31-year-old boss of a family business says his investment in digitalisation and more environmentally friendly products made during the pandemic is paying off and has contributed to a 20 per cent annual increase in orders.
“It’s going very well,” said Dell’Acqua, whose company in Lombardy —Italy’s initial Covid epicentre — makes plastic pipes and tubing. The company is “sailing through” the post-pandemic phase, he says, thanks to “a positive atmosphere generated by the sudden and unexpected recovery”.
Italy, the first European country affected by the pandemic, is now changing gear in its recovery after a widespread vaccination programme, robust investment and expanding exports.
“Italy’s economic outlook is far better than we expected in the spring,” said Mario Draghi, Italy’s prime minister, last month. He expects the country to grow 6 per cent this year, in line with the OECD and international private forecasters, and much stronger than the 4.5 per cent expected in April.
Italy’s economic growth had the biggest upgrade of any other G7 country over the past five months, according to Consensus Economics, which averages leading economists’ forecasts.
It is a marked change for a country that has suffered years of economic stagnation, dragging living standards below the EU average. Economists hope it could be a springboard for longer-lasting changes, with an ambitious programme of EU-funded reforms and public spending getting under way.
“For the first time in many decades, Italy is in such a favourable position,” Laurence Boone, chief economist at the OECD, told the Financial Times. She pointed to Italy starting to tackle well-known brakes on growth such as a sclerotic civil justice system and public administration and its ineffective competition laws. “Italy today is in the position of resetting its economy.”
Draghi, the former president of the European Central Bank, has put much of the improved outlook this year down to his government’s vaccination campaign. Italy’s proportion of fully vaccinated people is the second-largest among G7 countries, after it made a Covid “green pass” mandatory for most workers and access to most public venues.
Draghi said this had allowed the reopening of businesses without a spike in hospitalisation, boosting consumer confidence and spending. Household consumption rose by a strong 5.5 per cent in the second quarter.
Nicola Nobile, economist at Oxford Economics, expects Italy’s economy to have expanded by about 2.5 per cent in the third quarter, following an above expectation 2.7 per cent rebound in the previous quarter.
Other factors are also at play in the recovery, said Emma Marcegaglia, chair of the B20 international business summit, a G20 business forum.
Investment is “booming”, said Marcegaglia, thanks to government-supported incentives for energy efficiency improvements and purchases of machinery and equipment, as well as more investor confidence in Draghi’s government after years of political instability.
Many businesses have also stepped up digital investments to adapt to the pandemic — helping Italy, which lagged behind EU peers on readiness for ecommerce, to make up ground. Italy’s investment was 5 per cent above pre-pandemic levels in the second quarter, stronger than a marginal contraction in Germany and a 4.5 per cent drop in the UK.
Exports are also supporting the post-pandemic rebound, with Italy less affected than some countries by supply chain disruption thanks to lower reliance on semiconductor imports, according to some analysts. In the first seven months of the year, the value of Italy’s goods exports was up 4 per cent compared with the same period in 2019, better than stagnation for Germany and a contraction for France.
Manufacturers have proved agile in adapting to changing national and international restrictions, said Marcegaglia.
The green and digital transition could continue at a much faster pace if Italy gets the €205bn from the EUs “Next Generation” recovery plan that has been promised if key reforms and targets are achieved.
This is by far the biggest commitment by the EU to a member state and would be Italy’s largest support package since the Marshall plan after the second world war. Italy has already received an instalment of €25bn.
The OECD expects Italy’s economic output to return to pre-pandemic levels by early 2022, quicker than in previous estimates and much faster than the recovery in earlier recessions — although later than in most advanced economies. Before the pandemic, output had not recovered to levels of more than a decade earlier.
Italy’s government is certainly bullish. It expects strong growth to continue until at least 2024, reducing the country’s high public debt of more than 150 per cent of gross domestic product and the above EU average unemployment rate of over 9 per cent.
Nobile argues that “ambitious reform agendas typically face enormous political hurdles in Italy” and that official growth forecasts could be “too optimistic”. Political stability is also a threat to the reforms and spending plan.
“Good as all this modernisation may sound, Italy’s fractured political system has often meant that reforms started by one government get reversed or abandoned by the next one,” said Nick Andrews, economist at the investment research company Gavekal Research.
Meanwhile, there are shorter term concerns. Italy is already worried by Europe’s soaring energy prices and is to spend €4bn to subsidise bills. A protracted crisis could lower the pace of the recovery. Weakening demand following prolonged supply chain disruption and slowing Chinese economic growth create extra headwinds for the country and the global economy.
But Italy’s business and consumer optimism remain at a near-decade high. “Of course, we have to be cautious and continue to monitor critical factors such as the cost of raw materials and transport,” Dell’Acqua said, “but at the moment we have the wind in our sails”.
The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.
The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.
CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.
This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.
While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.
Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.
The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.
This report by The Canadian Press was first published Nov. 7, 2024.
Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.
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.
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.
