In the large EU economies, it grows only in France and Spain, while Italy records yet another decline linked (also) to Germany’s difficulties.
On the one hand, there is Germany, with its difficulties. On the other, weak domestic demand slowed by inflation. And in the middle, there is the crisis of Italian industrial production, which mainly concerns durable consumer goods and last April recorded a trend decline for the fifteenth consecutive month. Germany, on the other hand, has reached its tenth consecutive month of decline: the German production crisis has been lasting for less time than the Italian one, even if it is more pronounced than expected. Between September and December 2023, Germany suffered an average drop in industrial production of 4.5% compared to the same period in 2022, while in the same four months, Italy had a drop "only" of 1.5%. However, there is little to rejoice about because the destinies of the Italian and German industries are decidedly linked.
According to Istat, the Italian national statistics office, in Italy in the first four months of 2024 only the food sector and the coke and refined petroleum products manufacturing sector managed to increase the volumes produced in the same months of 2023. All the rest of production was down: in general by 3.3% and for some areas at really heavy levels. This is especially the case with the textile, clothing, and leather and accessories industries, which in the first four months of this year produced 9.9% less than in the period January-April 2023 But another evident production crisis is linked to manufacturing of means of transport, down by 5.4% compared to last year.
The decline in Italian industrial production mainly concerns consumer goods (-4.8% between January and April 2024 compared to 2023) and in particular durables (-8.7%). A decline of this type usually reveals a low spending capacity, due to inflation and uncertain expectations for the future on the part of consumers and businesses.
In Italy, industrial production is suffering especially in the fashion and motor sectors, among the most sensitive to foreign demand and geopolitical conditions. But also in mechanics, which is considered a flagship of the national industry and is negatively affected by any economic slowdown that occurs in Germany, being very linked to the German industrial supply chains. Berlin has just returned from a GDP drop of 0.3% in 2023 - the only case among the G7 economies - and from negative performances especially for the industrial sector. Minimal growth could arrive in 2024, but slower than initially expected: just 0.3%, as estimated by the Bundesbank. A long recovery that is worsening the fate of the Italian industry.
According to Eurostat, the Italian and German economies are the two main European economies whose industrial production is struggling the most. However, France and Spain are faring better. Excluding the trend decline of 0.7% in February, in 2024 France is recording slightly increasing production values month after month compared to the same periods in 2023: +0.9% in January, +0.4% in March and +1% in April. Spain is doing even better, growing 3.7% year-on-year in February and 1.1% in April.
In recent years the German economy had also prospered thanks to low interest rates, low-cost Russian energy, and strong demand for exports to China. The totally distorted scenario after 2020 with the pandemic and 2022 with the conflict in Ukraine has led to the slowdown of the "powerhouse of Europe", which in the meantime has also definitively abandoned nuclear power, a further a factor that could have aggravated the crisis in German industrial production.
Original article published on Money.it Italy 2024-06-11 16:35:01. Original title: La produzione industriale italiana è ancora in crisi
