Italy’s Economic Outlook 2023-2024

Italian GDP is expected to grow by 0.7% in both 2023 and 2024, slowing down compared to 2022.

During the two-year forecast period, the increase in GDP would be driven mainly by the contribution of domestic demand net of inventories (+0.8 p.p. in 2023 and +0.7 p.p. in 2024). This is in contrast to a marginally negative contribution of net foreign demand in 2023 (-0.1) and zero in 2024. The contribution of inventories is expected to be negligible in both years.

Internal demand will be mainly influenced by private consumption. (+1.4% in 2023 and +1.0% in 2024) thanks to the deceleration of inflation, associated with a gradual (albeit partial) recovery in wages and employment growth. Investments, although still growing, are expected to significantly slow down compared to the previous two years (+0.6% in 2023 and 2024).

Over the two-year forecast period, employment, measured in terms of FTE, will grow in line with GDP (+0.6% in 2023 and +0.8% in 2024). The improvement in employment will be accompanied by a decrease in the unemployment rate to 7.6% this year and 7.5% win 2024.

Inflation deceleration, mostly determined by the decline of energy raw material prices and restrictive monetary policies implemented by ECB, will moderate the dynamics of resident household expenditure deflator both in 2023 (+5.4%) and in 2024 (+2.5%).

The forecast scenario is based on the assumptions that inflation will continue to decelerate in the coming months, international trade will recover and the National recovery and resilience plan will be effectively implemented.