After the +3,8% achieved in 2022, Italy's GDP is expected to grow by 1,2% in 2023 and 1% in 2024. This is estimated by the OECD in the Economic Outlook, which doubles the estimates of last March going from +0,6% to 1,2%. These are forecasts similar to those released yesterday by Istat, according to which Italy will grow by 1,2% this year and 1,1% next year.
“The risks to growth – writes the OECD – are substantially balanced” also thanks to the high risks household savings "which could lead to a faster-than-expected domestic demand rebound." “On the contrary – warns the OECD – negative effects from the recent turbulence in the banking sector international or further delays in the implementation of public investment projects of the Pnrr could slow growth.
Speaking instead ofinflation, according to the OECD “overall, the combination of lower energy prices, more restrictive financial conditions and moderately restrictive fiscal policies should lead to a gradual easing of inflationary pressures while allowing for a modest recovery in activity”.
OECD on Pnrr: "Delays could reduce growth"
The Organization for Economic Cooperation and Development warns Italy: “Delays in the implementation of the Recovery and Resilience Plan could reduce GDP growth”. According to the Parisian economists, rather, "the rapid implementation of structural reforms and public investment plans in the Pnrr will be essential to sustain short-term activity and lay the foundations for sustainable growth in the medium term", as well as having "l 'additional benefit of exerting further downward pressure on the debt-to-GDP ratio'.
The OECD underlines that “the ongoing reforms of the public administration, the judiciary and the competition system are at a good stage and remain essential for increasing GDP in the medium term. But the expenditure of NextGenerationEU funds is significantly behind schedule, with cumulative spending at the end of 2022 being around 50% below initial spending plans, mainly reflecting delays in the implementation of public investment projects. For this reason, underlines the OECD, “the priority should be that of quickly replace non-viable projects with viable ones and strengthen the capacity of the public administration to act efficiently, manage and implement the public spending projects envisaged by the Pnrr"
OECD: reforms a key element for growth and debt reduction
“Italy's slightly restrictive fiscal stance” “seems broadly appropriate e continued consolidation will be needed in the coming years to put an end to the debt-to-GDP ratio problem on a more sustainable path”, reads the Economic Outlook, in which economists underlining that “structural reforms will be a key element to sustain growth and reduce the public debt-to-GDP ratio ”.
Going forward with the estimates, according to the OECD, the dpublic debt will drop to 140,7% in 2023 and 139,4% in 2024, while the deficit it will drop from 8% of GDP in 2022 to 4,1% in 2023 and then fall further to 3,2% in 2024.
In particular, the OECD claims that “while the fiscal policy in the period 2023-24 find a just one balance between fiscal prudence and support to growth, more fiscal consolidation will be needed in the coming years to raise the debt-to-GDP ratio along a more sustainable path. According to the Paris economists “the consolidation plans should include ambitious measures for fight tax evasion and complete spending reviews to increase the efficiency of public spending” And also the implementation of the Pnrr measures by raising growth “could have the additional benefit of reducing the debt-to-GDP ratio”. The international organization also points out that "the cost of the government to refinance the large stock of public debt is also increasing, with debt service costs expected to reach around 4% of GDP in 2024".
