ECB council member Mario Draghi has been drawing attention this weekend to the way in which higher oil prices and a continuing appreciation in the euro risk choking off Italy's ever-fragile economic recovery. I think he has a very good point:
"The Italian economy has rebounded from the fourth quarter of last year" Draghi said today in Washington, forecasting growth to be 1.2 percent this year. "Oil is the primary risk. There's also a risk that the euro will appreciate."
"First quarter growth may have ``slightly'' exceeded the central bank's 0.4 percent forecast expansion from the previous quarter, Bank of Italy Deputy Director General Pierluigi Ciocca said."
The euro has appreciated by 4.1 percent versus the dollar this year, after a decline of 12.6 percent in 2005, while light, sweet crude for June delivery fell back slightly (by 48 cents to US$74.69 a barrel) this morning in Asian electronic trading. My feeling is that the euro is unlikely to appreciate excessively, while oil can certainly continue an upward drift, depending on geo-political factors. However a euro even on or around current levels is no good thing for the Italian economy.
Italy Economy Real Time Data Charts
Edward Hugh is only able to update this blog from time to time, but he does run a lively Twitter account with plenty of Italy related comment. He also maintains a collection of constantly updated Italy economy charts together with short text updates on a Storify dedicated page Italy - Lost in Stagnation?