In the third quarter of 2023, Italy witnessed positive shifts in its financial dynamics, reflecting improvements in public debt and the purchasing power of consumers.
Public Finances:
- The net indebtedness of Public Administrations (AP) in relation to GDP stood at -5.0%, a marked improvement from -9.4% in the same quarter of 2022.
- The primary balance of Public Administrations, which accounts for debt net of passive interest, also showed improvement, with an incidence on GDP at -1.2%, compared to -5.6% in the third quarter of 2022.
- The current balance of Public Administrations was positive, representing 1.1% of GDP (-1.2% in Q3 2022).
- The tax burden decreased slightly to 41.2%, down by 0.2 percentage points compared to the same period the previous year.
Household and Consumer Trends:
- Disposable income for consumer households increased by 1.8% compared to the previous quarter, while consumption grew by 1.2%.
- The savings propensity of households rose to 6.9%, up by 0.6 percentage points from the previous quarter.
- Purchasing power for consumer households increased by 1.3% compared to the previous quarter, despite a 0.5% rise in prices.
Corporate Sector:
- The profit share of non-financial corporations decreased slightly to 42.5%, down by 0.7 percentage points from the previous quarter.
- The investment rate of non-financial corporations also decreased to 22.2%, a 0.4 percentage point decline from the previous quarter.
Expert Commentary:
In the third quarter of 2023, Italy’s public finance picture displays improved debt metrics and reduced tax pressure compared to the same period the previous year. The rebound in the purchasing power of households, initiated in the first quarter of 2023, continues, with a resilient savings propensity. Non-financial corporations, however, face a third consecutive decline in profit share, albeit at a slower pace, accompanied by a continuous reduction in the investment rate since Q4 2022.