The year 2022 will be remembered in Italy for the spike of energy prices. 2023 outlook will be influenced by Italy’s capability to implement Next Generation EU funds.
What happened since Russia’s invasion of Ukraine last February was disruptive. The concept of a holistic globalization, that included all countries that complied with the respect of the international law, belongs now to the past. Italy was particularly hit by its chronical dependence on natural gas import from Russia, 37% of the 76 million cubic meters of gas needed to make Italy work. At the beginning of September 2022, the prices of gas and of electricity increased 18 and 14 times respectively, as compared to the beginning of 2021. Italy, together with Belgium, is the country that has the greatest energy dependence combined with the least energy independence. On the positive side, however, Italy is only second to France in terms of renewable energy. Italy is now focused on 3 important programs: increase the use of renewable sources, electrify the final consumption, diversify gas supply sources. The price of renewable technologies has dropped by 85%, the efficiency has increased by 25%. It is therefore possible to reduce gas consumption for thermoelectricity by accelerating the installation of 85 gigawatt of renewable by 2030. In September, when Italians cast their vote, the GDP forecast for 2022 was estimated to be +4%. Most likely by year end a solid +3.9% will be on the record. With the extraordinary GDP performance of 2021 (+6.7%), Italy is back to pre-Covid levels. Italy did better than France and Germany. Despite the gloomy forecasts, production has risen, exports are booming, and even employment has increased. Despite the war and its corollary of energy crisis and inflationary flame, Italy proved to be resilient. During the last couple of months of 2022, however, manufacturing showed to be less vibrant, construction has slowed, and services are holding up with some difficulty. The Next Generation EU plan represents a counter-cyclical lever for Italy. In addition to the impressive amount – €191.5 billion plus € 30.6 billion of the National Plan for complementary investments –, Italy and the Italians need a new vision, a strategy for the country to be. One that provides them with an innovative social contract, that reconquers the primacy of politics. The time is ripe for a market driven policy making that marks the end of the unproductive spending by the State.
Ms. Meloni, the first Italian female Prime Minister, has this historical opportunity.
NEWEST Editorial, January 16th 2023
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