Consumption hits 5-year high, investments even better

But growth slowed in last quarter of 2015

(ANSA) - Rome, March 4 - Consumer spending has hit a five-year high in Italy and investments are doing even better in signs that Premier Matteo Renzi's optimism about the economy is well-founded.
    But economic growth slowed again in quarterly terms in the last quarter of 2015 and, adjusted for working days, GDP growth last year was just 0.6%, down from 0.8%. However, in another sign of cheer for Renzi, Moody's Investors Services said there was a momentum for reforms in Italy thanks to the head of steam he has built up with a range of structural measures.
    Private consumption in the fourth quarter of 2015 recorded the highest growth in over five years, Istat said Friday.
    The national statistics bureau said the 1.3% growth registered in the fourth trimester of last year was the highest from the third trimester of 2010, when consumption grew 1.6%.
    Investments in the fourth quarter of 2015 registered an even more significant increase, up 1.6%.
    It was the highest growth since the second trimester of 2007 - when growth was 2.1% - and since the start of the global economic crisis in 2008.
    Italian GDP rose 0.1% in the fourth quarter of 2015 over the third quarter and by 1.0% on the fourth quarter of 2014, Istat said Friday, confirming February 12 estimates. "Over the course of the year quarterly growth has shown a gradual weakening," the statistics agency said. Last year started with +0.4, followed by +0.3% and +0.2%. The year-on-year figure, on the other hand, is the highest since the second quarter of 2011. Industry and services were both 0.1% over the quarter while agriculture fell 0.1% although it showed an 8.4% rise over the year, against 1% for industry and 0.5% for services. In the UK fourth-quarter growth was 0.5% (1.9% yearly), in the US 0.3% (1.9% yearly). France had yearly growth of 1.4% and Germany 2.1%. Premier Renzi has hailed recent GDP figures as showing that the Italian economy is revving up again thanks to his reforms, especially to the labour market.
    This was corroborated by the news from Moody's.
    Thorsten Nestmann, vice president and senior analyst with Moody's Investors Service, on Friday said that Italy was in a "momentum phase" regarding reforms, and that the government's estimate that reforms will grow GDP 1.8% between now and 2020 is "reasonable".
    "Instability has been a problem for Italy for many years.
    The outlook for potential governments that last longer is, in our view, positive, and heads in the right direction," Nestmann said.
    The government's new public guarantee on non-performing loans (GACS, in its Italian acronym) will result in a "rather modest" reduction on non-performing loans, which amount to 200 billion euros, but within three years should be reduced by one-fifth, said Carlo Gori, vice president and senior analyst in Moody's Financial Institutions Group.
    Gori called it a "useful but not decisive measure" and said that Banca Monte dei Paschi di Siena (MPS) should find a partner, especially given that it has undergone a process of securitization.
    Gori said the market reaction to banks since the beginning of the year has been "excessive" and that banks are "much more solid than in 2008, with capital doubled".
    Gori said the market is less liquid and more volatile because investment banks have left the capital market.
    Meanwhile in the City of London, Economy Minister Pier Carlo Padoan said Italian bank' bad loans can act as a brake on growth but they hardly represent any realistic risk of banks collapsing.
    Padoan stressed that the problem was the fruit of "three years of recession". Padoan listed "radical" government moves to bolster the banking system, including reforms of cooperative banks, foundations and local savings banks, as well as a State guarantee on the securitization of non-performing loans (NPLs). Padoan came out in favour of "structural reforms" when quizzed about a possible 'bad bank'.
    The minister also pointed out that the amount of NPLs was a net 89 billion euros, which should be the figure referredto, not the gross figure of 201 billion euros.
    The government has repeatedly insisted that the solidity of the Italian banking system is not threatened by its relatively high ratio of NPLs.
    Padoan added that recent positive employment data were a big boost to confidence in the economy.


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