Svimez report, GDP below zero in the South. Spectrum recession

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01 August 2019The gap between South and Center-North is widening again, after a three-year period 2015-2017 of (albeit weak) recovery in the South. This is what we read in the previews of the Svimez 2019 Report on "The economy and society of the South". As predicted in last year's report, explains Svimez, if Italy slows down, the South undergoes a sharp slowdown. The "double gap" is consolidating more and more: of Italy with respect to the European Union and of the South with respect to the Center-North. It is in the Italian problem, therefore, that the southern problem is accentuated, on which the specter of a new recession now hangs. In 2018 the South recorded GDP growth of just + 0.6%, compared to + 1% in 2017.

The data that emerges is of a weak recovery, in which, moreover, the development gaps between the areas of the country are widening. The revision of our estimates shows that, with the significant exception of 2015 (a year marked by positive economic factors and the closure of the European funds cycle which led to a modest recovery of public investment in the area), also in 2016 and 2017 the growth gap in the South was wide. 

The most worrying data, in 2018, which marks the divergent territorial dynamics, continues Svimez, is the stagnation of consumption in the area (+0.2, against the +0.7 of the rest of the country). While the Center-North has now recovered and exceeded pre-crisis levels, in the decade 2008-2018 the contraction in southern consumption was equal to -9%. The weak contribution of private household consumption (with food consumption dropping by 0.5%) is weighing in 2018, but above all it is the lack of contribution from the public sector. The final consumption expenditure of the Public Administrations which marked a further -0.6% in 2018, continuing a process of contraction which, cumulated in the decade 2008-2018, is equal to -8.6%, while in the Center-North the growth registered is 1.4%: one of the main causes, despite clichés,which explains the divergent dynamics between the areas.

GDP below zero, substantial stagnation

Svimez estimates a GDP below zero for the South for this year. "In the second half of 2018, the economic trend worsened significantly - explains the association -. The modest growth observed in the first six months, which continued the expansionary trend that started at the beginning of 2014, has given way to an increasingly marked slowdown in In the context of a gradual slowdown in the Italian economy, the territorial fracture has reopened which in the near future will mark an opposite trend between the areas, plunging the South back into the recession from which it had too slowly emerged ".

"According to the forecasts prepared by Svimez - he continues -, in 2019, Italy will record a substantial stagnation, with a very slight increase in GDP of + 0.1%. The GDP of the Center-North should grow little, by just + 0.3%. In the South, on the other hand, the expected trend is negative, a recessive dynamic: -0.3% GDP. In the following year, 2020, Svimez expects that southern GDP will start to rise again, however only + 0.4% (employment will also return to growth, albeit slightly, with + 0.3%). The trend of the most important economic variables in the Center-North is better, with an increase in gross domestic product equal to + 0.9%, but in any case not able to bring Italy back on a path of robust development (in 2020, the increase in national GDP will be + 0.8% andoccupancy of + 0.3%) ". 

"The causes of these not very encouraging prospects for the Italian economy - explains Svimez - are primarily to be found in the deceleration of world trade, subjected to growing pressures, from the sudden protectionist outbreak to the strong tensions in various parts of the world. worsening exports, within the aggregate demand, remains the component for which SVIMEZ expects a relatively more sustained growth. And inevitably the Central North benefits above all, given the greater and growing participation of this area in world trade flows ".

As regards, however, domestic demand, in 2019, Svimez expects that gross fixed investments will suffer a strong deceleration, negatively influenced by downward expectations and a physiological decline after the increase induced by the "Industry 4.0" incentives. significant in 2017 (and only partially in 2018). Loans to businesses fell in the first 4 months of 2019 by -8% in the Center-North and -12% in the South, confirming a worsening of the prospects for the southern economy. The only component that should record a more sustained trend, as in 2018, is that of investments in construction, which in any case should grow more in the central-northern regions. Household consumption expenditure should result, both in the Center-North and in the South,little more than stationary. This variable, which strongly affects the dynamics of southern GDP, is heavily influenced by the weakness of the employment dynamics and the persistent weakness of the rebalancing action of public intervention.

The emigrants are the real emergency, more than the immigrants

The real emergency for the South are the emigrants who are superior to the immigrants who choose to live in the South of Italy, says Svimez in the previews to the report on the economy of the South. "The people who emigrated from the South were over 2 million in the period between 2002 and 2017, of which 132,187 in 2017 alone - explains the association -. Of these 66,557 are young people (50.4%, of which 33.0% graduates, equal to 21,970).

The internal migratory balance, net of returns, is negative for 852 thousand units. In 2017 alone, 132 thousand southerners left, with a negative balance of about 70 thousand units. The resumption of migratory flows represents the real southern emergency, which in recent years has gradually spread to the rest of the country ".

"There are more southerners who emigrate from the South to go to work or study in the Center-North and abroad than regular immigrant foreigners who choose to live in the southern regions - he continues -. According to Svimez's calculations, in fact, citizens foreigners enrolled in Southern Italy from abroad were 64,952 in 2015, 64,091 in 2016 and 75,305 in 2017. Instead, the Italian citizens canceled from the South for the Center-North and abroad were 124,254 in 2015, 131,430 in 2016, 132,187 in the 2017. These numbers show that the emigration emergency from the South determines a loss of population, especially young people, and skilled, only partially compensated by the flow of immigrants, modest in number and characterized by low skills.This dynamic determines above all for the South a very worrying demographic prospect of depopulation, which concerns in particular the small towns under 5 thousand inhabitants ".