Ignazio Visco: The economic outlook, the challenges for the financial system and for regulators

Speech by Mr Ignazio Visco, Governor of the Bank of Italy, at the 26th Congress of ASSIOM FOREX (the Italian financial markets association), Brescia, 8 February 2020.

The views expressed in this speech are those of the speaker and not the view of the BIS.

Economic developments

Economic activity in Italy has been virtually stagnant since the early months of 2018, in part owing to the slowdown recorded at European and global level. The latest cyclical indicators have provided conflicting signals. Our business surveys continue to point to expectations of an expansion in demand. Conditions on the financial and credit markets have improved, and investors' confidence has risen, as shown by the sizeable purchases of public sector securities made by non-residents and the considerable reduction in their yields, and the significant narrowing in the ten-year spread with the German Bund. However, Istat's preliminary estimate indicates that GDP declined by 0.3 per cent in the fourth quarter of last year, in part likely reflecting especially unfavourable developments in the most erratic components of final demand.

Our projections reported in the most recent Economic Bulletin, which were formulated before the release of Istat's preliminary estimate, suggest that GDP growth will still be very low this year, after remaining virtually unchanged in 2019, but will be higher in the next two years.