The Bank of Italy announced on Thursday that the Italian economy is expected to grow by 0.8% both this year and next. This projection aligns with the bank’s previous estimates from April, which anticipated a 0.8% expansion for 2024 and a slightly higher 0.9% growth for 2025.
Adjusting for the number of working days, the central bank revised its growth forecast for this year to 0.6%, with an acceleration to 0.9% next year. These estimates are based on data available up to May 22 and form part of the European Central Bank’s broader forecasting exercise for the eurozone.
Inflation remains a key factor in these projections. The Bank of Italy forecasts an average EU-harmonised inflation rate of 1.1% for this year, a slight decrease from the 1.3% predicted in April. The inflation rate is expected to rise to 1.5% in 2025, down from the earlier estimate of 1.7%.
Recent economic data reflect the bank’s cautious outlook. Italy’s GDP, unadjusted for working days, increased by 0.3% in the first quarter of 2024 compared to the previous quarter, which saw a marginal 0.1% rise. Analysts expect similar modest growth in the coming quarters, predicting a full-year expansion of between 0.7% and 1%, aligning closely with last year’s 0.9% rate.
The Italian government is slightly more optimistic, forecasting a 1.0% growth for this year and 1.2% in 2025. This discrepancy underscores the central bank’s conservative stance amidst ongoing economic challenges.
As the eurozone’s third-largest economy, Italy’s growth projections are crucial for both domestic and international stakeholders. The photograph of Milan’s Porta Nuova district, captured by Stefano Rellandini, symbolizes the nation’s economic resilience and gradual recovery.
With these projections, Italy aims to balance its growth trajectory with inflation control, setting the stage for a pivotal period for its economy.
Photo source: Google
By: Montel Kamau
Serrari Financial Analyst
14th June 2024
