War in the Middle East has put Lebanon on the brink of economic disaster. The recent return of violence to Lebanon derails hope that the worst of the crises that have plagued the country over the past four years have been left behind. (The Conversation)

Why central bankers are skittish about early interest rate cuts. Central bankers are wary about pivoting to interest rate cuts too early—and the data support that wariness. It's clear from a slew of news on both sides of the Atlantic. (Axios)

China's 2023 GDP shows patchy economic recovery, raises case for stimulus. China's economy grew 5.2% in 2023, slightly more than the official target, but the recovery was far shakier than many analysts and investors expected, with a deepening property crisis, mounting deflationary risks and tepid demand casting a pall over the outlook for this year. (Reuters)

Ukraine needs money from the US and Europe to keep its economy running. Will the aid come? Ukraine’s hard-won economic stability is under threat again as the government faces a large budget hole and its two biggest allies and sponsors—the United States and the European Union—have so far failed to decide on extending more aid. (AP)

Nation’s top economists are short-term happy, long-term glum. The good news: the U.S. is headed for growth this year, not recession. The bad news: there is as yet little prospect growth will be any better than before the pandemic. (WSJ)

Congress approves funding to avert US government shutdown. The interim measure would finance some U.S. agencies through March 1 and others through March 8. (Bloomberg)

Davos 2024: Can—and should—leaders aim to regulate AI directly? At this year's World Economic Forum in Davos, global leaders are asking whether to put guardrails in place for AI itself, or look to regulate its effects once the tech is developed. (BBC)

Delinquencies spike on loans tied to office buildings. Here's a quick update on the world's most well-telegraphed credit market problem—office loans. (Axios)

Rifts emerge among top Israeli officials over how to handle the war against Hamas in Gaza. Rifts are emerging among top Israeli officials over the handling of the war against Hamas in Gaza. (AP)

Crisis-ridden Sri Lanka’s economic reforms are yielding results, but challenges remain, IMF says. Debt-stricken Sri Lanka’s economic reform program is yielding the first signs of recovery, but the improvements still need to translate into improved living conditions for its people, the International Monetary Fund said Friday. (AP)

The 2023 bank bailout tab arrives. America's biggest banks each took a 10-figure hit to their earnings last quarter to cover the cost of bailing out uninsured depositors at Silicon Valley Bank and Signature Bank. (Axios)

Oil prices rise on US-UK strikes over Red Sea attacks. Oil prices jumped by 4% after the U.S. and UK launched strikes in Yemen over recent attacks by Houthi rebels on ships in the Red Sea. (BBC)

China’s economy expanded 5.2% last year, hitting the government’s target despite an uneven recovery. China’s economy for the October-December quarter grew at a quicker rate, allowing the Chinese government to hit its target of about 5% annual growth for 2023 even though trade data and the economic recovery remain uneven. (AP)

Bank of Italy Lowers Growth Forecast

Jamilex Gotay, editorial associate

Italy is one of the most-visited countries on Earth, and the most important sector of Italy’s economy is the tourism industry. The services sector bests the industry and agricultural sectors in importance, with technological and financial services key areas. Many people in Italy work in manufacturing, agriculture and trade, according to the World Trade Reference.

Italy purchases 15% of its imports from Germany, 8% each from France and China, 6% each from Russia and the Netherlands, and 4% each from Spain and Belgium. Italy imports engineering products, transportation equipment, chemicals, minerals, nonferrous metals, fuels, textile and apparel, food, beverages and tobacco. Its import services include tourism and transportation, banking and information and communication technologies.

In its economic report released on Dec. 15, the Bank of Italy revised its growth forecast for the Italian economy, anticipating a modest 0.6% expansion this year, down from the earlier October estimate of 0.8%. ECB also highlighted expectations for Italy’s average EU-harmonized inflation rate to reach 1.9% next year.

By the numbers: According to the European Commission, real GDP in Italy is set to accelerate to 0.9% in 2024 and 1.2% in 2025. “Inflation is forecast to fall to 6.1% this year, 2.7% in 2024 and 2.3% in 2025,” the report reads. “The reduction of the government deficit- and debt-to-GDP ratios is projected to come to a halt in 2024-25.”

During the two-year forecast period, the increase in GDP would be driven mainly by the contribution of domestic demand net of inventories (+0.8 p.p. in 2023 and +0.7 p.p. in 2024), according to a report by Istat. “This is in contrast to a marginally negative contribution of net foreign demand in 2023 (-0.1) and zero in 2024. The contribution of inventories is expected to be negligible in both years.”

Italy’s inflation deceleration is mostly determined by the decline of energy raw material prices and restrictive monetary policies implemented by the ECB, will moderate the dynamics of resident household expenditure deflator both in 2023 (+5.4%) and in 2024 (+2.5%), Istat reports. “The forecast scenario is based on the assumptions that inflation will continue to decelerate in the coming months, international trade will recover and the National recovery and resilience plan will be effectively implemented,” the report reads.

Italy’s real GDP growth is heavily driven by the Recovery and Resilience Facility (RRF)-funded investment, which supports sustainable tourism and the urban regeneration in Italy, focused on digitalization and innovation, green transition and economic and social resilience. 

In a Nov. 24 press release, the European Commission gave a positive assessment of Italy's modified recovery and resilience plan, which includes a REPowerEU chapter. “Italy’s REPowerEU chapter consists of five new reforms, five scaled-up investments drawing on existing measures and 12 new investments to deliver on the REPowerEU Plan's objectives to make Europe independent of Russian fossil fuels well before 2030,” the report reads. “The plan is now worth €194.4 billion (€122.6 billion in loans and €71.8 billion in grants) and covers 66 reforms, seven more than in the original plan and 150 investments.”

Customers in Italy have averaged 19 days beyond terms, with 29% of credit professionals saying payment delays have increased, per the December FCIB Credit & Collections Survey. The most common causes for payment delays are customer payment policy (53%), cash flow issues (47%), inability to pay (33%) and billing disputes (33%).

What FCIB Credit and Collections Survey respondents are saying:

• “Credit professionals need to be very clear in communicating with sales and customer service of the need to pay within pay terms failing which upcoming orders would be blocked.”
• “Obtain updated credit information and look for owner and address verification, as changes are often not communicated by the customer. Know all you can about the customer. Pull a credit report for payment history and legal status and name verification.”
•  “Make sure customers have liquidity.”

The January Credit & Collections Survey is now open. It covers China, Colombia, Ecuador and India.

Week in Review Editorial Team:

Annacaroline Caruso, editor in chief

Jamilex Gotay, editorial associate

Kendall Payton, editorial associate