As of: March 26, 2024, 7:54 p.m
By: Bona Hyun
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Italy's economy is apparently growing faster than Germany's.
There are several reasons for the growth spurt - but how long will the trend continue?
Rome – While the prospects for the German economy are rather critical, things are clearly looking up in Italy: According to
Politico
, the Italian economy is in...
last quarter of 2023 grew by 0.5 percent.
The positive trend is likely to continue.
The OECD (Organization for Economic Cooperation and Development) expects economic growth of 0.7 percent in 2024.
What is behind the growth spurt?
Italy's economy is growing - what are the reasons for the boom?
According to analysts, economic growth in Italy stands out as a positive because the economy in other countries, such as Germany, performs comparatively poorly.
After all, the traffic light only expects a growth forecast of 0.2 percent for 2024.
In addition, according to the Federal Ministry of Economics, there are signs that the German economy has not yet recovered.
Italy's economy is apparently growing faster than Germany's.
© Bernd von Jutrczenka/dpa
According to Politico,
Germany is
also particularly affected by China's economic slowdown.
In 2020, around 8 percent of German exports went to China; last November it was just over 5 percent and a decline of 13 percent compared to the previous year.
Compared to Germany: Italy's economy is experiencing growth miracles
The growth of the Italian economy is also being boosted by the increase in consumer spending and the faster flow of money from the European Union's economic stimulus plan.
People familiar with the matter recently announced this to
Bloomberg
.
Because Italy was severely affected by the corona pandemic, the country received a lot of money from the EU's corona reconstruction fund.
So far, Italy has only spent around 45 of the 195 billion euros promised.
Since the fund officially only runs until 2026, there is likely to be “a significant acceleration in spending in the coming years,” economist Lorenzo Codogno from the London School of Economics told
Handelsblatt
.
Italy’s economy is growing quickly – partly because of the “super bonus 110 percent”
Italy also experienced a mega-boom for heat pumps and house renovations.
The government of former Prime Minister Giuseppe Conte wanted to stimulate the construction industry with the help of the “Superbonus 110 percent” - which he succeeded in doing, but it cost the state 150 billion euros.
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For years, homeowners were able to renovate their facades to make them more energy efficient or install solar modules on their roofs and not only received the entire cost back through their tax return, but also received ten percent of the investment on top of that.
Italy's economy on the rise?
Economic experts make predictions
Nicola Nobile also attributes Italy's better economic performance "to the strong tax incentives in the construction sector".
Tax incentives "helped construction activity much more than in other countries, for example the 0.2 percent GDP growth in the fourth quarter of last year was [entirely] driven by construction," the economist at Oxford Economics told the Financial
Times
.
However, the boom could decline, economists warn.
In addition, the super bonus is putting massive pressure on the state budget: according to the Handelsblatt
, up to 30 billion euros
could be missing from the planning for 2024 alone .
Nevertheless, economists and investors remain optimistic.
According to
Handelsblatt,
interest rates on ten-year Italian government bonds have remained relatively constant at 3.66 percent since the beginning of the year.
(bohy)