THE OUTLOOK FOR THE ITALIAN ECONOMY - YEARS 2023-2024

05.12.2023

Italy's GDP is expected to grow by 0.7% in both 2023 and 2024, slowing down compared to 2022.

Over the two-year forecast period, GDP growth would be mainly supported by the contribution of domestic demand net of inventories (+0.8 percentage points in 2023 and +0.7 p.p. in 2024) against a marginally negative contribution from net foreign demand in 2023 (-0.1 p.p.) and zero in 2024. On the other hand, the contribution from stocks is expected to be nil in both years.

Domestic demand will be mainly driven by private consumption (+1.4% in 2023 and +1.0% in 2024) supported by the deceleration of inflation, a gradual (albeit partial) recovery in wages and employment growth. Investments are expected to slow down sharply compared to the previous two years (+0.6% in both years).

Employment, measured in terms of work units (AWU), will increase in line with GDP (+0.6% in 2023 and +0.8% in 2024), accompanied by a decline in the unemployment rate (7.6% this year and 7.5% next year).

Inflation will be reduced as a result of lower energy prices and the consequences of the ECB's restrictive monetary policies. The dynamics of the deflator of resident household expenditure fall to +5.4% in the current year and to +2.5% in 2024.

The forecast scenario assumes the continuation of the decline in consumer prices and the prices of imported raw materials, a gradual recovery in world trade and the gradual implementation of the investment plan envisaged in the PNRR.

An in-depth analysis of the assessment of the macroeconomic effects of the 2024 budget law shows results in line with the NADEF, albeit with greater effects on consumption than on investments.


FDT CONSULTING