Industry ends year 2023 in sharp slowdown

Most sectors are slowing down. In positive countertrend only Belluno eyewear. Food and beverages and industrial machinery are holding up. The most acute phase of the slowdown should be over, although the recovery in 2024 will be very gradual.

Economy - published on 06 March 2024

Source: Press Office Chamber of Commerce of Treviso - Belluno | Dolomites

The manufacturing economy in the fourth quarter 2023

Commentary by President Mario Pozza

The results of the economic survey conducted on the usual sample of manufacturing companies in Veneto, Treviso and Belluno, returns us also for the fourth quarter of 2023 a situation that we can still attribute to a phase of slowdown, in part also an effect of the various close shocks experienced by the economy in the recent past – comments the President of the Chamber of Commerce of Treviso-Belluno, Mario Pozza.

To use a metaphor, we can say that the regional (and provincial) manufacturing industry is traveling with the handbrake on, looking for a road to normalization – reflects Pozza – However, needless to go around it, in the meantime for Treviso and Belluno we have to cash in on indicators that are all negative in the comparison with last year. Production flexes -5.4% in Treviso and -6% in Belluno. First cause: the weakness of international demand. In fact, foreign order intake is down -6.7% in Treviso and -5.8%in Belluno, again compared to last year. It is no better for domestic orders, down on Q4 2022 by -3.1% in Treviso and -3.8% in Belluno.

The exception is eyewear, which sees production levels rising (+1.8%) compared to last year, mainly due to foreign demand. Production (stable year-on-year) of machinery and agri-food products also holds up.

This is the picture that emerges at first glance from the economic survey – the President continues – But analysts warn that we must read these data in a thoughtful way, tracing them back to the gradual process of normalization of global value chains, after the post-Covid restart, and to the efforts so far to contain inflation, and price speculation. It is a process that is also inevitably conditioned by the weakness of some important economic partners such as Germany (to which almost 14% of regional exports are directed and which is the first market for exports) and by the international tensions that have opened up on several fronts (Russia-Ukraine conflicts, Gaza-Israel and the consequent difficulty in navigating the Suez Canal).

Forecasts for the next quarter are still in the sign of uncertainty, with shares of forecast judgments of increase equaling stability for many indicators. The hope is that the low point has been reached, although the turnaround is likely to be gradual and differentiated by sector. Central bank decisions will count a lot at this stage. But – Pozza comments – I find fully supportable the warning of our Governor Panetta, who in fact wonders whether it is not time to change the direction of monetary policies.

We repeatedly invite companies – Pozza continues – to face these scenarios of uncertainty by making investments: on digitalization, on market diversification, on sustainability. But a restrictive monetary policy does not help. As a chamber of commerce system, and also as Assocamerestero, of which I am president, we are committed to supporting businesses in these processes of change, but we need a change in the underlying climate, we need Europe, as Panetta well points out, not to arrive too late in cutting rates, when by now the damage could be greater than the benefits.

The international and national picture

The slowdown in the Treviso and Belluno manufacturing industry continues. Beyond the cyclical “rebounds” on the third quarter, in the last part of 2023 all the indicators analyzed are largely in negative territory. This fact is not surprising in an international context still characterized by a slowdown in world demand during the period under review. In other times, one could easily have spoken of recession risk. Today, however, as is well known, the world economy has gone through (and continues to go through) a major series of shocks and close changes (pandemic, reopenings, supply crises, war in Ukraine, energy price increases, and more recently deglobalization, monetary tightening and disinflation) that require a more considered reading of economic dynamics.

As analysts in (…) Continued in attachment

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