Scenari & Tendenze: what about the economic situation in the first quarter of 2021?

In such a delicate phase as the one we are still facing today, the economic and financial trends are for sure a current and interesting topic, especially for companies. As already mentioned in the previous news regarding the 34^th appointment of “Scenari & Tendenze” (lit. Scenarios & Trends), the prolongation of the pandemic has had significant consequences also socially and economically speaking. While the other news focused on the data analysis of our industry, this focuses on the information provided by the circumstances observatory regarding the international, national and local economic scenario.

International Economy

The perspectives seem to be positive: according to the expectations of the International Monetary Fund, by the end of 2021 the global revenue should make up for the losses of 2020. Also international trade has started increasing again, reaching pre-Covid levels at the end of 2020.

National economy

In Italy there has been an unprecedented drop in production levels due to the pandemic but since March 2020 there has been a partial recovery of the manufacturing industry, especially for the factories. In Italy a loss in GDP of about 9-10% was recorded and the huge number of victims caused by Coronavirus even makes the situation worse. This scenario gave rise to unprecedented consequences socially and economically. In 2021 a recovery is expected, although not enough to reach the levels before Coronavirus. What shall we expect then? According to Cristina Volpi, Vice president of the Small Industry section of Confindustrua Brescia A lot will depend on the actuation of the Recovery Fund. We need to be conscious that this is a unique opportunity to relaunch the production system toward a sustainable and inclusive transformation”.

Local economy

Brescia is undergoing a deja vu, with minimum levels as the ones of 2009. The pandemic has voided 10 years of growth for the production of Brescia. As already underlined for the national economy, the manufacturing industry is slowly recovering but without reaching the pre-pandemic levels. The recovery of international commerce was at the base for the restart of export in the last three months of 2020. Brescia, despite the pandemic, classified 5th nationally with regards to exportations, showing its incredible potential. These signs can be encouraging but still should be interpreted also considering some criticalities which could cause problem in the current scenario.

Let’s see now in general the main global growth dynamics after the pandemic.

Global growth after the pandemic and main industrial commodities

As already illustrated above, the global growth, despite some slowing down, has restarted. Currently there are high fluctuations to which market quotations are subjected. What are the main causes behind the oscillation in prices? Herein are some highlighted by Scenari & Tendenze:

1. China, the protagonist of global growth, came out of the pandemic already in April 2020; while the rest of the world is still blocked. The fixed situation in other countries, the low prices of raw materials and a weak dollar led China to make strategic and heavy purchases for stock.
2. Demand from the rest of the world which partially reopens its economy, a further raw material demand adding up to the Chinese one.
3. Financial Speculation.
4. The competition among companies is further hindered by an unexpected increase in transportation costs. The pandemic and the additional checks needed in this emergency situation influenced also the port movement of goods. This is essential if considered that 60% of goods is transported in containers and that there are still delays in port movements. This has led to a difficulty in supply of raw materials and container availability, with ensuing increased renting costs.

Thus, we have seen the main causes at the base of the increase in prices of the main industrial commodities, along with an overall view of the main economic perspectives. What is important to underline is that, also according to Scenari & Tendenze, the companies do not stop even after a pandemic and its consequences, showing their resilience.

Source: Confindustria Brescia - "Scenari & Tendenze", 16^th March 2021.