Its pointing to a recession, then you have economic contraction, q4, production has dropped, you have underperformance relative to other eu members, why is italy not doing that well, which is pointing to a recession overall, not just in manufactoring, and then were going to uh give you some um news about the eu economy as a whole as to why its not doing that well, you have a money supply decrease, you have lending and deposits have declined, and you have record. Bankrupcies. Italys economy is in crisis. According to the latest data, the countrys gdp shrank by 0. 4 in the Second Quarter of 2023, when compared with the First Quarter. The downward revision has cast doubts over prospects for the rest of the year, as Prime Minister of georgia, malonis rightwing government prepares to draw up his 2024 budget. As recently as last week, the leader of the countrys rightwing Coalition Government was predicting her nation would outperform germany and france this year. Italys Manufacturing Sector also contracted in august for fifth consecutive month. The august manufacturing pmi index came in at 45. 4, up from 44. 5 in july, but still well below the 50 mark that separates growth from contraction, raising the risk of weak Economic Activity extending into the third quarter. Rome is officially forecasting fullyear 2023 growth of 1 , slowing sharply from the berlins 3. 7 percent rate in 2022. The government is also preparing a 2024 budget that is expected to stick to italys commitments to keeping its deficit a downward trend, that will leave little leeway for stimulus. Time to look at some of the online posts on this, we took a look at some websites, the first one, Economic Forecast for italy, the latest microEconomic Forecast for that country, where it said italys Economic Growth starts down last year halting the postpandemic rebound which had lifted growth to 7 for the year 2021 and 3. 7 for 2022. Went out to say after pickup in the First Quarter of 2023 gdp decreased by 0. 4 in the Second Quarter driven by falling domestic demand, particularly investments in construction. Next italys economic resurgence, a prime opportunity for g7 presidency in 2024, more optimist. Look, it seems with this entry, where it said the 2024 g7 presidency will provide a unique opportunity for italy to present the structural progress made by its economy in recent years, particularly after the pandemic, quite a contrast to the previous post. Next, uh, the date here is important, this was posted on september the 1st, 2023. Italys economy shrinks in the last, or the latest, i should say, quarter, casting a shadow over the outlook, italys gdp shrank by. 0. 4 in the Second Quarter from the first and its Manufacturing Center sector contracted in august for fifth consecutive month. Obviously that points to how manufacturing is a problem in that country. And our last entry again, the date important here, this was july 31st, 2023. Protests europ in italy over cuts to poverty relief scheme, where uh cuts to this scheme. All right, so we figured some of those entries gives you a clue as to how the. Economy there in italy is struggling, but more importantly lets find out what our guests think, let me welcome our guests for this first segment of the q a, we have alex krayner joining us, hes an author and geopolitical analyst. Alex craigner, welcome to economic divide. Um, were looking at italys economy to not performing that well, uh, and this particular question i like to zoom in on manufacturing, um, in particular how factories have start have laid off many the Manufacturing Sector. Has contracted um since um last year in the middle of last year up till now where people um an analy have said theres a manufacturing recession, why has italys manufacturing done so poorly . I think that the causes of this crisis stretched back into the early 1990s, you know, and and i think that they are they have the root in the western. Financial markets, so so it stems from the financial markets, just year ago, italian 10year Government Bond was yielding 0. 6 , today it trading at over 4. 4 , and it looks like its trading higher, and you know, if the interest trades break higher, its it spells a whole lot of trouble for the italian economy, in 2016, i think 17 of all assets on the books of italian banks were marked as bad loans and by last year that that miraculously fell to 4 . All that happened is that the Bank Regulators regulators declared these loans as good loans, they um, they approved them as a collateral for the repo markets and they got lost. In europes target to rebalancing system. Okay, thats a very important point that our guests there uh talked about, something which many perhaps are not uh informed as to how these loans have just been ridden off, and im sure the figures are pretty high. Our next guest, claudio cosa joins us, hes an associate professor Economic Policy at the university of naples in italy. Claudio coza, welcome to economic divide, so the economy in italy. Reported to shrink unexpectedly, were looking at the second half of 2023 which were in right now, um, and its even said that theres going to be a sharper production drop compared to the other euro zone economies, uh, which brings about the natural question, why is italy underperforming when it comes to his pears . Well, in my opinion, we have always ups and downs, so in general we have a European Crisis that is now, i mean since uh, at least over the last 15 years, so last year it seemed that italy was better performing as compared to other industrial economies in in europe, this year and this quarter it seems the the opposite, so for instance we have other Large Industrial countries that have been facing problems or stagnation, think about germany that is zero, but also poland had a. Is this year why for instance uh france and spain were better performing, but maybe last year there was a problem with france, so um, we should not look too much at momentary problems of the single economy, while look at the trend, and the trend is negative for all european euro zone. The International Community became involved in mali following the adoption of a Un Resolution in 2013. Its an evil force that needs to leave our land. Its been of no use, it has failed to deliver, give us a. Two weeks and we will drive them out of the country. I love our country and i love the armed forces. I think theyre doing a good job. We want new constitution for young people in mali. It will bring peace, prosperity and stability. Section of the program, when it comes to a country like italy, its hard to imagine how its not doing that well in terms of its economy, but that is the. Case we are going to get into the reasons why that is happening, although there are many, but hopefully youll get an idea through this indepth section of the program. All right, lets look at the first graph that we figured is important and thats italys gdp growth so you can get a taste as to whats happening with this country. As you can see in the year 2018, very modest growth, just above 0 . 2019, you could see a little bit below that actually, the year 2020 is when covid hit, you can see the dip there in the negative territory, then the year. 2021 um it shot up thats called the covid bounceback and then the year 2022 which uh it did relatively well considering uh the fact that it carries so much debt but uh why is it that its not progressing its not in improving now in his uh gdp output in order to find that out we want to go to the next graph lets take a look at the way that uh this is worked out for italy so as were about to see uh in this next graph thats come up um lets see the yearonyear annual average, thats what we picked uh for uh germany, relative, im sorry for italy relative to the rest of the countries uh in the year area, here you can see uh germany for example 1. 9 in terms of the gdp growth for the year 2022, and then were looking at uh, lets zoom in on italy here, where uh for the year 2022, it did relatively well, 3. 9 , okay, but then could see the dip there, 0. 3 for the year 2023. Okay, and then for the year 2024, modest growth uh that has happened there, based on what we see over here for its growth for 2023, were looking at roughly around 1 . Okay, this gives you an idea about how its doing with some of its uh piers in the euro area, uh, the countries we spick we picked, spain, france and germany. So uh looking at the most recent uh year, which would be the year that were in, overall we can see that uh, not only are other countries not doing that well in the euro area such as the power house for example, germany or france, italy, again, um, very, very low growth as evidence in this uh particular uh graph that you see in the bar that you see there, which as i mentioned, comes it, comes in at around 1 . All right, lets move to the. Next graph, this is important uh, because this is about the inflation rate, okay, the categories that we picked, all items in general, then ones that are only food and energy, we deducted, and then uh we broke it down to food and energy, being the top categories where inflation has been registered, so uh, take a look at the uk, for example, 7. 9 roughly is uh what were looking at for the inflation rate. There when it comes to all its items. Now in terms of italy, again, we did a comparison here, the countries we picked, the uk, germany and france, italy came in at 7. 6 for all the items, but then when it came to um, all items less food and energy, we can see this is where it ranks in terms of its inflation, inflation which is a little bit above 5 or actually just a little bit below 5 , but then here is where uh it shot back up, food and energy seemed to have. Uh have the uh same value and that value is a little bit over uh 10 , were looking at roughly around 11 or 12 . Okay, this shows uh again a comparison in the eu area, the euro zone as it is called, france, germany and the uk being the other countries, of course uk is not part of the euro zone, but it is in europe, so that gives you an idea about the inflation and how its impacting the country. Next up, this is very important because the year zone is known for this and this is about the loans okay now we uh picked out the outstanding loans and put it into perspective with the countries that carry um those uh high loans such as uh france uh spain and germany uh that is the french spanish and the german economies so we put them all in one bar so you can see how that is transpiring and as youre about to see over here you can see that italy. Uh does have a substantial amount of loans that uh it has uh gotten uh the loans that it carries out up um intern has an effect on the uh European Central bank because of the fact that these uh loans get dispersed from those banks uh so you can see relatively speaking the loans by uh italy which is in the black that you see over here relative to the other countries that is is ranking relatively high uh and the q Second Quarter of 2021 along with uh its the Fourth Quarter of that year. Uh the loans are ranked pretty high uh let me put another piece of information in a uh perspective here for you uh in terms of the the type of loan that italy is grappling with. Lets move to the next graph in order to find that out. This is a pretty incredible one and it has to deal with italys covid loan. Take a look at how much it had to borrow. 100 123. 2 billion euros, that much money italy actually borrowed, now obviously thats a high figure, but there are other countries also, not only in europe and the eurozone who have had extensive and high amounts of money that they dispersed because their covid related economic problems that they were experiencing, so uh this also puts into perspective the amount of loan uh that italy had to uh endure, including this this big one, which is 123. 2 billion euros. Now what about italys debt . Okay, lets take a look at that um and lets put that into perspective by putting it next to other countries uh in um the euro zone. As you can see over here, were looking at around uh, a little over 2. 5 trillion euros that uh the debt of italy is. And then when you put it next to other countries like spain, portugal, greece, france and ireland, you can see how its towering them uh, where they are coming in at roughly 2. 3 trillion euros, roughly or 2. 25 trillion euros, so thats italys debt next to other countries. Also to put things into perspective for you a little bit, we uh went and uh looked at uh the growing debt that has occurred um for it. Through the years, we started with the year 2020, and look how its just keeps increasing, all the way through to january 2023, of which if you take a look at the um, i believe thats the highest debt that italy is carrying, and that is over 2. 5 trillion euros, roughly two point, perhaps f25 um trillion euros, thats a lot of uh debt that italy. Has accumulated, and thats the problem that not only is italy experiencing in the euro zone, but also a lot of other countries such as france, and spain, theyre carrying lot of debt, which has dragged down the euro zone economy. All right, i think thats enough for you in terms of facts and figures to try to understand how italy is doing, especially in the context of the eurozone, and we brought in some other countries for you, but lets have our guest. Dissect this for you. Alex krayner, author and geopolitical analyst rejoins us. Uh, alex craigner, welcome back to economic divide. Uh, in terms of the question id like to ask you, is the um money supply uh has decreased in the eurozone . Now this the first time this has happened in 13 years. Uh, at the same time, private sector lending, that has stagnated, you have deposits that have also declined, the Second Quarter 2023, bankrupcies have gone up, its. Record uh, thats a sixth quarter in a row, the highest since 2015. My question is, are we looking at another eu financial crisis . Yes, i think we are looking at another eu financial crisis, this crisis are mathematical certainty, given the given the Monetary System that we operate under, namely this system is only stable for as long as it grows, at present you with the Federal Reserve in the United States, tightening the monetary policy, increasing Interest Rates and reducing their balance sheet, the eu, the ecb, in order to stam the flight of capital to the United States from europe, they had to follow the same policy, in spite of the fact that its a known thing that if you do this, you know, you begin to to shrink the the money supply, that theres going. To be a significant segment of your of your economy, you know, firms and as well as individuals, are be going to be grow, going bankrupt, and so we see that happening now in real life, this was this, this should have been, this was predictable, this was predicted, and this will not stop until the monetary policies loosened again, all right, wow, well thats not good news for the euro. As a whole, claudio kosa rejoins us, associate professor in Economic Policy from the university or at the university of naples. Welcome back economic divide. I was going to ask. Ask you another question, but our guess there talks about how uh you know there might be risk of another financial crisis happening uh for euro zone as a whole um mean some of the indicators are pretty stark money supply decreasing for the first time in 13 years uh you have deposits that have declined youre looking at um things like bankrupcy declarations have also increased and this is again the high since 2015 as i mentioned in my previous question, so is is it really possible now that the eu might be experiencing another financial crisis . Yes, i think we can, we are in a way in the same financial crisis that has our rebounds and ups and downs over time, but yes, that could be another financial crisis, the problem with the small firms, as i said before, 99 of italian firms are small and medium enterprises. This means that they are not able to self fund, especially in times of crisis, so they have very low or even negative cash flows, so they are not able to self fund themselves and they need the Banking System to support them, but when the Banking System goes under pressure, and of course as happen now for the 10th times the european European CentralBank Increased the Interest Rates, Banking System is not helping small and medium enterprises. Italy is not alone in the current climate of crisis. Business insolvencies in the eu have hit record highs. According to the blocks official Statistics Agency eurostat, the number of businesses declaring bankrupcy in the Second Quarter of 2023, increased by 8. 4 compared to the First Quarter, fueled by trouble in the food and housing sector. Figures mean bankrupcies of increased for the sixth consecutive quarter, unseen since eurostat started collecting data in 2015. Crisis comes in rising Interest Rates in the euro zone monetary region. The European Central bank piled a 10th straight Interest Rate increase pressing forward and is fight against stubbornly high inflation that has been plaguing consumers, even as worries grow out that higher borrowing costs could help push the economy. Into a recession, the options are on the table, to continue to hike or to hold, and we also know that it will vary meeting by meeting because we want to be determined by the data, financial squeeze could point to a further downward trend. Dcbs measure of overall money in the euros one system decreased 0. 4 in the year to july, down from growth of 0. 6 in june. The main cause of the decline in the blocks money supply in 13 years was drop in the annual growth of lending to the private sector. The rate was 1. 6 in july, the slowest rate since 2016. Lending to governments also declined to 2. 7 , the biggest fall since 2007. Hello and welcome to the quick take section. Im mattiapolisan. We have been covering italys economic situation, but what about the eu as a whole, which italy is member of. How is the eu doing . In order to do that, lets first start by looking at eus top economies. At first glance, these look to be impressive numbers, especially germanys output, but as of the saying goes, looks can be very deceiving. Why deceiving . Lets go back to the 2008 world financial crisis. In order for europe to deal with the problem, like the us, it had to exercise monetary stimulus. It called it the Asset Purchase Program or app for short. In december 2008, the European Council agreed on an euwide economic stimulus of around 200 billion euros as revealed here in the economic recovery packages in eu Member States report. Even though that figure cousioned some of the losses from the financial crisis, it soon became apparent that the eu needed to continue its stimuluus because the eu economies were not rebounding as quickly as the eu had anticipated. The stimuluus figures were astounding. The app or Asset Purchase Program had become the European CentralBank Signature policy. The eu was buying bonds from commercial banks at the pace of 60 billion euros a month. The ecb revealed since may 2015, it had pumped over 2. 5 trillion euros of liquidity into the eurozone economy through the app and that does it for this quick take section. Please let us know. How we are doing by sending us your comments, contact info is on your screens now, im mattiapolis and ill see you next week. The eurozone economy is not doing that well, it really has not climbed out of the 208 debt crisis in some respects and the double lamy of the covid pandemic, well that stunted its growth, even after all the stimulus thats been pumped into its economy, over two trillion. euros, growth has been minimal, in the meantime, you have things like inequality to have increased uh across the euro zone. Whats the solution then . Well, ending the ukraine war, thats the starters, thats for starters and not following a us dictats in terms of uh things like the ukraine war, that could also be a start. That does for this edition of the program. Thank you so much for tuning in to us, especially the ones to do that weekly. We do appreciate any comments or questions, do send them to us, contact. Information is behind me, for me and the team, its goodbye, onto the next economic divide. Im lembratopic here on press tv and i want you to join me for cats and dogs where we take a quick look at dirty laundry in washington, bad manners at the united nations, and barking people in germany, literally. Thats all on press tv, with me lambopic and cats and dogs, dont miss it. Your headlines for this hour ukraine says its only matter of time before it becomes a nato member as france and britain promise fairther military support to kiev. Leading economic institutes warned the recession in europes largest economy germany this year. 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