General indications and the overall performance of the economy

The performance of the global economy in 2015 proved weak. Despite contributing 70% to global growth of 3%, the emerging countries slowed down for the fifth consecutive year, while the recovery in economic activity in the advanced countries was still modest1.

The United States (whose GDP rose by 2.4% in 2015) benefited mostly from a recovery in domestic consumption, the labor market and the real estate market and from an expansionary monetary policy, albeit displaying a gradual slowdown in the second half of the year that was led by weakness in exports (reduced demand from the emerging countries and the strengthening of the dollar) and domestic investments.

Expansion in the eurozone continued at a moderate rate. The recovery in consumption and, even if to a lesser extent, investments (supported by the decrease in raw materials prices and an expansionary monetary policy respectively) was partially offset by the weak foreign demand.

While growing at a rate essentially in line with expectations (with GDP rising by 6.9% in 2015), the Chinese economy rebalanced its spending from investments (with a negative effect on its demand from abroad) to consumption.

Oil prices progressively fell, mainly due to expectations of production exceeding demand, causing a marked reduction in the demand arriving from exporting countries and a reduction in extraction investment.

Expansionary monetary policies continued, with the ECB keeping the cost of money at the historical minimum of 0.05% and priority being given to tackling the risk of deflation by way of increased support of credit flow to the real economy. In the United States, the Fed increased interest rates by a quarter of a point in December 2015 for the first time in seven years.

The performance of inflation remained well below the targets of the advanced economies, penalized by trends in raw materials prices (first and foremost oil) and by weak international demand.

For 2016 prospects remain exposed to risks principally connected with a further deterioration in the growth of the emerging countries, the rebalancing of the Chinese economy and the extent and timing of interest rates in the United States.

The overall macroeconomic balance for Italy in 2015 was slightly positive (with an estimated rise of 0.8%2 in GDP for the year). The thrust of domestic demand for consumption, supported by an improvement in labor market conditions and disposable income, offset the weakening of exports caused by the fall in demand arriving from non-European countries.

Inflation remained around the zero mark for the whole of 2015 (with an average of +0.1%). The considerable fall in energy prices had its effect on weak price changes, but this was also accompanied by a continuation of margins of under-capacity in industry that are contributing to keeping basic price changes at minimum levels.

There was an improvement in labor market conditions. The unemployment rate in Italy fell to 11.4% in December 2015 compared to 12.9% at the end of 20143.

The performance of loans granted by the banking system in 2015 was positive, above all for lending to households and the public administration. Figures for business loans are still negative but rose during the last few months of the year.

Although the gradual improvement in economic activity is having favorable repercussions on credit quality, the banking system's non-performing loans continue to act as a brake on the economy.

Forecasts say that the recovery should continue in 2016. The slump in oil prices and the present phase of low inflation will continue to push domestic consumption, partially offsetting the low production rates of businesses and the slowdown in exports.

  • (1)World Economic Outlook Update; 19 January 2016; International Monetary Fund.
  • (2)PA GDP and debt; ISTAT; 1 March 2016
  • (3)Economic Bulletin 1 / 2016; Bank of Italy