Italy’s Economic Outlook 2023-2024

Italian Gdp is expected to increase in both 2023 (+1.2%) and 2024 (+1.1%), albeit slower than in 2022.

Over the forecast period, the increase in Gdp would be supported mainly by the contribution of domestic demand net of inventories (+1.0 percentage points in 2023 and +0.9 p.p. in 2024) and the smaller contribution of net foreign demand (+0.3 and +0.2 p.p.). In 2023, inventories are expected to make a marginal negative contribution -0.1 p.p. to be followed by 0 p.p. in 2024.

The consumption of resident households and ISPs in line with the trend of economic activity is expected to show an increase in 2023 (+0.5%), which will strengthen the following year (+1.1%). Gross fixed capital formation will maintain high growth rates, compared with other components +3.0% in 2023 and +2.0% in 2024 decelerating in comparison with the previous two years.

Over the two-year forecast horizon, employment, measured in terms of Fte, will show growth in line with that of Gdp (+1.2% in 2023 and +1% in 2024). The improvement in employment will be accompanied by a decline in the unemployment rate to 7.9% this year and 7.7% the following year.

Falling energy commodity prices and restrictive policies implemented by central banks, will be reflected in a reduction in the household consumption expenditure deflator both in the current year (+5.7%) and, to a greater extent, in 2024 (+2.6%).

The forecast scenario is based on favorable assumptions of price reduction in the coming months and the implementation of recovery and resilience plan for the next two years.