Bank of Italy has cut forecasts GDP growth for 2025 and 2026, while revising the estimates downwardsinflation, which would “decrease in 2024” to 1,1%. For 2024, the prospects remain stable compared to the forecasts at the beginning of April: Bankitalia expects growth of 0,6%, which rises to 0,8% once adjustments for working days are excluded. However, a slight decline is noted for the following two years, with expected growth of 0,9% in 2025 and 1,1% in 2026, compared to previous estimates of +1% and +1,2%. Far from the objectives set by government. This update – explains Via Nazionale – reflects the current forecast of slightly higher interest rates compared to some time ago. Economic activity will benefit from the acceleration of foreign demand and the recovery of disposable income, but investments they will be held back by condizioni financial stringent and come on cuts to building incentives (Super bonus).
The inflation, according to forecasts, is maintained under control with a modest 1,1% in 2024 and a slight but steady increase to 1,5% over the next two years (April estimates called for a rate of 1,3% this year and 1,7% % in the next two years). This moderate increase is mainly attributable to the stabilization of energy and intermediate product prices, while i wage increases they will be absorbed by profit margins and the limited trend in import prices.
Bank of Italy, in its projections, assumes that thegeopolitical uncertainty and tensions on international financial markets, although persistent, do not worsen further.
Bank of Italy: consumption growing in 2024, investments slowing down
The recovery of families' purchasing power will support the consumption growth, which after a slowdown in 2023, should start to grow again during 2024. However, the investments will suffer a marked slowdown due to the high costs of financing and the reduction of incentives for the redevelopment of homes, only partially mitigated by the increase in infrastructure spending expected in the National recovery and resilience plan.
Regarding the labor market, Palazzo Koch foresees a employment growth, albeit at slower rates than overall economic growth. The unemployment rate is expected to fall to 7,3% on average in 2024 and remain stable in the following two years.
Le exports should expand in line with foreign demand, while the cheap imports will grow at a slower pace, due to weak investment spending. The current account balance of the balance of payments, already positive last year, is expected to continue to improve, approaching 2% of GDP by 2026.
However, significant risks remain. Financial conditions could tighten further, with possible negative effects on investments, while sudden changes in commodity markets could affect inflation.
