Bankitalia file downwards 2024 GDP estimate and that ofinflation for the entire period 2023-2025, the 2025 GDP will rise. The Italian economy, therefore, will grow gradually in the coming years, with an increase in family consumption, slowed investments and growing employment. But the unemployment rate will slowly decline. Inflation is expected to average 6% this year and will fall below 2% in the next three years. However, there are risks related to the geopolitical context and global uncertainties, which could negatively affect economic growth. This is what emerges from the last one Bank of Italy economic bulletin. Via Nazionale's macroeconomic projections for Italy for the period 2023-2026, developed as part of the Eurosystem's coordinated exercise, reflect a scenario that envisages a limited economic impact deriving from geopolitical uncertainty, avoiding significant tensions on international financial markets and raw materials.
In the intended context, it is expected that the international exchanges resume growth over the next three years, with an average increase of 3%. The projections take into account the most recent information relating to the budget maneuver for 2024-2026 and the use of European funds under the Next Generation EU programme, based on the National Recovery and Resilience Plan (PNRR). However, monetary and credit conditions are tightened due to the significant increase in monetary policy interest rates.
Gradual growth
Regarding the economic trend, after a slight summer increase, GDP is expected to stagnate in the current quarter, with a subsequent gradual recovery from the beginning of next year, supported by the recovery in disposable income and foreign demand. Overall, GDP would increase by 0,7% in 2023, by 0,6% in 2024 e by 1,1% in 2025 and 2026.
Compared to the projections published in October, GDP growth is revised downwards in 2024, reflecting a prolonged phase of economic weakness, while it is revised upwards in 2025, mainly due to financial markets' assumptions of slightly higher interest rates low.
Consumption, investments and employment
I consumption of families would expand at a rate higher than that of GDP, supported by the recovery of purchasing power. The investments would slow down considerably, influenced by rising financing costs and rigidity in access to credit. The exports will follow the trend of foreign demand, while the cheap imports they will grow at a slightly lower rate, due to the weakness of spending on investments in capital goods, characterized by a high content of imported products.
THEoccupation, growing strongly in 2023, will continue its expansion, but at a slower pace than the increase in GDP. The unemployment rate will gradually decline, reaching just under 7,5% in 2026.
Inflation estimates revised downwards
THEconsumer inflation, currently at 6%, will reduce significantly over the next three years, remaining on average below 2%. This decline mainly reflects the reduction in the prices of raw materials and intermediate products, only partially offset by the acceleration of wages (expected to increase by approximately 3,5 percent per year on average in the three-year period 2024-26). L'underlying inflation it would reduce more slowly, consistently with a gradual transmission of the lower costs of intermediate inputs to final prices. Upward pressure could come from further increases in raw material prices.
Compared to the October estimates, the trend in consumer inflation has been corrected downwards for the entire period 2023-2025, with a significant revision in 2024 of 0,5 percentage points. This correction reflects a faster decline in energy prices and a more significant slowdown in the basic component, as evidenced by the most recent data.
In detail, Via Nazionale estimates inflation of 6% in 2023, 1,9% in 2024, 1,8% in 2025 and 1,7% in 2026.
The risks
It should be emphasized that these projections are characterized by high uncertainty, with risks more oriented towards fall. The geopolitical environment, global uncertainties and potential difficulties in the Chinese economy are all factors that could adversely affect economic growth. Therefore, the risks of greater monetary restriction and a decrease in the confidence of families, businesses and investors must be considered when evaluating the economic outlook.
In summary, the projections indicate a gradual growth of the Italian economy with some positive elements, but also with risks and challenges that could influence the overall economic picture.