Italian Economy Experiences Difficulties: Confidence Is Falling

The Italian economy is in crisis, and the difficult situation may continue in the coming months. This is evidenced in particular by the lower propensity to save, which for several quarters has been lower than in the pre-Covid period, and by the average increase in household final consumption expenditure in the context of significant stability in disposable income: the harmonized consumer income index. Prices rose in September, widening the difference with the eurozone average. This was reported by the National Institute of Statistics ISTAT, which also explains why the consumer confidence index fell for the third time in a row in September, reaching its lowest levels since June. Negative signals also come from the business climate index, which is declining in all sectors of activity, except for construction.

“The revision of Italy’s quarterly national accounts confirmed the cyclical changes in GDP for the first half of 2023: growth between January and March (+0.6%) was followed by a decline in the second quarter (-0.4%),” the ISTAT report said. “On the supply side, the seasonally adjusted index of industrial production rose by 0.2% in August compared with the previous period and averaged 0.4% for June-August.”

The international situation is again putting pressure on the overall picture, “characterized by different cyclical positions of the major economies and uncertainty about the continuation of the slowdown in inflation.” Recent tensions in the Middle East and rising energy prices will further influence this.

Inflation continues to decline slightly, with the national consumer price index trend reversing at 5.3% (compared to 5.4%). In particular, the growth in prices is slowing down for food products (from +9.7% to +8.6%), for durable goods (from +4.6% to +4%); prices are accelerating for energy carriers (from +5.7% to +7.6%) and transport services (from +1.2% to +3.8%).

In conclusion, ISTAT explains that the weak phase of the Italian economy may continue in the coming months.