The European Commission has reduced its GDP growth forecast for Italy in 2024, now expected at 0.7%, compared to the 0.9% indicated in the November estimates.
The expectation of a GDP growth of 1.2% in 2025 is confirmed.
Estimates of expected growth in the Eurozone have been revised downwards
, with GDP expected to rise by 0.8% in 2024 (from the +1.2% indicated in November) and by 1.2% in 2025 (from +1, 6%).
In the EU, GDP is expected to grow by 0.9% in 2024 (from +1.3%) and confirmed at +1.7% in 2025. The large stagnation in 2023 has translated into a weak momentum at the beginning year, it explains.
The expectation is for a gradual acceleration this year.
Real wage growth and labor market resilience should support a recovery in consumption.
All EU countries are now expected to grow in both 2024 and 2025.
In its winter forecasts, the European Commission estimates Eurozone inflation at 2.7% in 2024 and 2.2% in 2025
.
For Italy it is expected at 2% in 2024 and 2.3% in 2025. For the EU it is expected at 3% in 2024 and 2.5% in 2025. In the autumn forecasts the expectation on inflation it was higher both in the Eurozone (at 3.2%) and in Italy (at 2.7%).
And it was seen at 2.2% in 2025 in the euro area and 2.3% in Italy.
The press conference of the Commissioner for Economy Paolo Gentiloni on the new economic forecasts.
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The EU sees Italy's recovery with disinflation and rising wages
The Commission predicts that in Italy "economic output will continue to grow slowly in 2024, with the purchasing power of families expected to benefit from disinflation and rising wages wages, in a context of a resilient labor market", we read in the winter forecast released by the community executive.
"Investments are destined to recover, led by infrastructure projects financed by the government and the Pnrr which offset the drag resulting from lower spending on housing construction" he continues, forecasting that annual GDP will grow by 0.7% in real terms, slightly lower than expected in the autumn.
The expectation for investments is that they will "accelerate in 2025, as the implementation of projects supported by the PNRR accelerates, stimulating both infrastructure spending and the purchase of tangible and intangible assets of businesses, which are expected to benefit also by improving financial conditions. This surge in capital spending is set to translate into stronger growth in imports, above the slightly improving outlook for exports."
GDP growth in 2023 was 0.6%, slightly below the autumn 2023 forecast, as private consumption moderated and investment slowed significantly due to rising financing costs. and the gradual elimination of tax credits for home renovation."
EU, uncertainties linked to geopolitical tensions have increased
The European Commission's winter forecasts are "surrounded by uncertainty" due to the continuation of geopolitical tensions and the risk of a further expansion of the conflict in the Middle East.
The EU executive explains in the document that it expects that the increase in shipping costs following the disruptions to trade in the Red Sea will have only a marginal impact on inflation.
Further disruptions could, he explains, however, cause new supply bottlenecks that could stifle production and push up prices.
At the national level, risks to baseline projections for growth and inflation are related to whether consumption, wage growth and profit margins underperform or exceed expectations, and how high interest rates remain and for how much time.
Climate risks and the increasing frequency of extreme weather events also continue to pose a threat.
Gentiloni: 'Uncertainty remains exceptionally high'
In the European Commission's forecasts "the balance of risks is unbalanced towards more adverse outcomes. Uncertainty remains exceptionally high, in a context of prolonged geopolitical tensions and the risk of a further widening of the crisis in Middle East", said the EU Commissioner for Economic Affairs Paolo Gentiloni presenting the winter forecasts of the community executive.
Due to the crisis in the Red Sea
"delivery times for shipments between Asia and the EU have increased by 10-15 days and costs have increased by around 400%",
indicated Gentiloni, specifying however that "at least so far , neither global nor EU supply chains appear to be under strain."
"The increase in shipping costs is expected to exert limited upward pressure on inflation in the EU," he underlined.
“Close coordination between prudent and investment-friendly fiscal and monetary policies should be
pursued to support ongoing efforts to keep inflation at low levels
. ”
"It is in our power and it is our responsibility to support sustained and sustainable growth - explained Gentiloni -. The effective implementation of national recovery and resilience plans is a fundamental priority, as is the dual transition towards a green economy and digital".
"
It is never the Commission's way of acting to talk about corrective measures, much less when faced with zero point changes in this or that forecast
", explained Gentiloni, when asked
about the possibility that the executive might ask Italy for a corrective measure
.
"It can certainly be said that the forecasts regarding Italy are largely within the European average as has been the case since the pandemic and I believe this is an assessment that can give confidence to the Italian economy".