Italy: Central Bank Confirms GDP Estimate at 0.8%

The Bank of Italy reiterates its GDP growth estimate for 2024 at 0.8% and slightly revises upward the forecasts for 2025 and 2026.

The global context reveals less than encouraging signs: “There are signs of a slowdown in the global economy, especially due to weakness in manufacturing. In the USA, activity remains strong, while in China domestic demand continues to suffer from the crisis in the real estate sector,” the Bank of Italy wrote in its quarterly bulletin. “According to September OECD estimates, global GDP growth will be just above 3 percent in 2024 and 2025, the same as last year.” However, the US and Chinese central banks are taking expansionary measures.

The US Federal Reserve cut official rates, and China’s central bank took new measures to stimulate the economy. The European Central Bank cut official rates again in the general context of an economy that is developing slowly while disinflation is consolidating.

However, base inflation is expected to decline fast: 2.5% in 2024, 2.2% in 2025, and 1.9% in 2026.

In Italy, growth continues, but at a moderate pace: “Growth was moderate over the summer; the new expansion in services was due to continued weakness in manufacturing. Aggregate demand was primarily affected by the consumption trend, supported by a recovery in disposable income, amid a negative contribution from foreign sales,” the bulletin wrote. Meanwhile, the current account surplus is widening, labor demand is falling, and real wages are gradually recovering.

“Our projections,” the institute concludes, “confirm earlier estimates of GDP growth of 0.6 percent in 2024 (0.8 excluding adjustment for business days) and forecast an acceleration over the next two years, during which output would increase by more than 2 percent cumulatively. Consumer inflation will remain low: at 1.1% in 2024, and at 1.6% in 2025 and 2026.”