Good news for the Italian growth. The European Commission revised upwards its growth estimates for 2023 which will expand by 1,2% (and not by 0,8% as estimated in February), in line with the Fitch's predictions. In 2024, growth will slow slightly to 1,1%, but still better than the 1% previously forecast. On the public accounts front, Brussels continues to be more cautious. The Italian public debt it is expected to be stable in 2024 (140,3%), compared to 2023 (140,4%).
The ones published today, Monday 15 May, by the European Commission are "cautiously optimistic" spring forecasts. "I think it is interesting for Italy that in the current year we project the highest growth among the three major European economies - said the European Commissioner for the Economy, Paolo Gentiloni, in the press conference to present the spring economic forecasts -. I don't think this has happened for a long time. Italy has had a very significant growth of 12% in the last three years. It certainly followed the -9% crisis during the pandemic but the growth was very significant – continues Gentiloni -. The slowdown that we foresee is different from the Government's projection, it is a diversity dictated by the fact that some aspects of the expansive policy that the Government considers are not defined in outline and we cannot take them into account and we forecast a less favorable level of investment than that Italian. But I don't see a negative connotation for these forecasts which are encouraging for Italy”, explained Gentiloni.
Forecasts for the Eurozone
For the Eurozone, the EU authorities have revised upwards the growth expectations now forecast for 2023 to 1,1% (from 0,9% estimated in February) and for 2024 to 1,6% (from 1,5 .5,8%). However, inflation estimates are also increasing, expected at 2023% in 2,8 and 2024% in 0,2, respectively 0,3% and XNUMX% more than the estimates published in February in the Winter forecast. “Overall inflation is declining rapidly, but core inflation” which excludes the components of energy and unprocessed food, “remains high”, concluded Gentiloni.
The forecast for Italy
On the Italian front, the forecast is one growth by 1,2 in 2023 and 1,1% in 2024, a slight increase compared to the estimates published in winter (0,8% and 1%), with the increase in prices which "holds back private consumption while investments, supported by government measures, continue to expand vigorously”.
Il inflation rate it is estimated to decrease to 6,1% this year, thanks to falling energy prices, and to 2,9% in 2024.
Then the painful notes. The Italian public deficit remains high: equal to 8%, 4,5% and 3,7% thanks to the "partial elimination of energy support measures", and will reach 3,7% next year. While at the euro area level it should continue to decline, from 3,6% in 2022 to 3,2% in 2023 to 2,4% in 2024. The situation on the front of the debt. According to Brussels, the Italian debt will be 140,4% of GDP in 2023 and 140,3% in 2024 (the government expects 142,1 and 141,4%). Therefore, there remains a very high public debt and limited economic growth potential in 2024, especially after the rate hike. The new economic forecasts come as member countries negotiate a difficult and hard-fought reform of the Stability Pact and the Eurogroup presses Rome for the ratification of the Mes.
Ratification of the Mes: Italy under examination by the Eurogroup
The new economic forecasts will end up on the Eurogroup table where, however, the Minister of Economy, Giancarlo Giorgetti will have the usual node Month: the European Stability Mechanism, better known as the State Rescue Fund, whose reform it was not only ratified by Italy. Giorgetti will reiterate his line: to separate investments for the double transition (digital and green) from the calculation of the debt. It is easier for the German request to insert a minimum annual target for debt reduction to be accepted (Berlin asks for at least 1%, but in the end it is probable that a lower quantitative parameter will be inserted). The match is all uphill, at stake are the reforms that we want to put in place in the banking sector, because the failure to ratify the Mes blocks the entire reform process. And in the event of a crisis, European banks could find themselves without a financial safety net.
