ROME (ITALPRESS) – Italian GDP will grow by 0.7 percent in 2024, compared to the 1 percent expected by the government in the structural budget plan. This is the outcome of macroeconomic projections over the four-year period 2024-27 prepared by Bank of Italy experts as part of the Eurosystem’s coordinated exercise.The projections, as agreed as part of the exercise, are based on information available as of Nov. 20 for the formulation of technical assumptions and as of Nov. 27 for economic data.The growth projections prepared by the Bank of Italy are formulated on data adjusted for the effect of the different number of working days between years, unlike those prepared by the MEF and released in the Medium-Term Budgetary Structural Plan (MTSP) published last Sept. 27. To compare the BoI’s estimates with those of the MEF, it is therefore necessary to refer to the estimates unadjusted for the effect of the different number of working days.The GDP growth estimate for 2024 that excludes this effect is 0.7 percent (1.0 in the PSB framework).Over the three-year period 2025-27, the GDP growth rate in the BoI framework averages about 1 percent per year (both in adjusted and unadjusted terms for working days) and deviates only slightly from that of the PSB.Inflation is estimated in the projections to remain contained, standing at 1.1 percent in the current year’s average, 1.5 in the next two years, and 2.0 percent in 2027. The main contributors to the rise in inflation would be the fading of the strong negative contribution of the energy component and, in 2027, the temporary effects of the entry into force of the ETS2 regulations.Core inflation would be just over 2 percent on average this year and fall to just over 1.5 percent in the next three years, in which pressures from rising labor costs would be largely absorbed by profit margins.”Output is estimated to have returned to expansion in the current quarter at a moderate pace, and growth is likely to gain momentum from the second half of next year, thanks mainly to favorable consumption trends and a recovery in exports,” the Bank of Italy stresses. Compared with projections published in October, GDP growth is revised downward by about 0.1 percentage point per year, due to less favorable than expected trends in the second half of 2024 and the effects of assumptions of lower foreign demand growth and slightly higher interest rates. Consumption, after falling sharply at the end of 2023, has been rising again since the first quarter of this year and would continue to grow over the next three years, supported by the healthy trend in household purchasing power and lower interest rates. Investment would slow down, feeling the effects of the downsizing of incentives for housing upgrading, which would be only partly mitigated by the increase in infrastructure spending and the incentive measures envisaged in the NRP. “Exports, still weak in the second half of this year, would return to expansion from next year, at rates similar to those of foreign demand,” the Bank of Italy further highlights. Imports would grow more moderately, feeling the effects of weak investment spending. The current account balance of the balance of payments would stabilize at around 1.0 percent of GDP. “Employment would continue to grow, albeit at rates below those of output. The unemployment rate, which fell to 6.1 percent in the average summer quarter, would remain broadly stable over the three-year period 2025-27.
– Photo Agency Photogram –
(ITALPRESS).
