Economic Outlook for Italy – Years 2023-2024

Italy’s GDP is expected to grow by 0.7% in both 2023 and 2024, showing a slowdown compared to 2022.

In the two-year forecast period, the GDP increase 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), while the contribution of net foreign demand is expected to be marginally negative in 2023 (-0.1 p.p.) and zero in 2024. The contribution of inventories, on the other hand, is expected to be nil in both years.

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

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

Inflation will decrease due to the decline in energy prices and the consequences of the restrictive monetary policies implemented by the ECB. The dynamics of the deflator for resident households’ expenditure will decrease to +5.4% in the current year and +2.5% in 2024.

The forecast scenario assumes the continuation of the decline in consumer prices and imported raw material prices, a gradual recovery of global trade, and the progressive implementation of the investment plan outlined in the National Recovery and Resilience Plan (PNRR).

An in-depth analysis of the evaluation of the macroeconomic effects of the 2024 budget law shows results in line with the National Accounting and Finance Document (NADEF), albeit with greater effects on consumption compared to investments.