The cut in forecasts, according to the rating agency, is due to a worse-than-expected result in the second quarter of 2023. The increase in interest rates and the tightening of credit conditions will also weigh on investments and consumption
Fitch has slightly reduced its growth forecasts for Italy, and now expects growth of 0.9% in 2023 and 1% in 2024. The cut in forecasts, explains the rating agency, is due to a worse than expected result in the second quarter of 2023 when GDP contracted by 0.4%, with household consumption stagnating. Retail sales volume was 0.6% lower in the May-July period compared to the previous quarter.
Slowing of growth
“The surge in investments, favored by tax breaks that are about to expire, characterized around half of Italy’s development in 2021 and 2022. The end of this boom indicates a slowdown in growth” explains the rating agency. The increase in interest rates and the tightening of credit conditions, according to Fitch, will also weigh on investments and consumption. Credit to families in relation to GDP is equal to 40.8% in Italy, compared to the Eurozone average of 56%. Investments in machinery and equipment held in the second quarter of 2023, but construction fell.
Forecasts
The ratings agency still expects investment growth in 2023 and 2024, under the assumption that public sector investment can take up the baton from households. This assumes that Italy can reap some benefits from the investments contained in the National Resilience and Recovery Plan, but the agency has revised its expectations downwards, which explains part of the downward revision of GDP growth for 2023. The International Monetary Fund, in recent weeks, had also highlighted possible downside risks for the Italian economy.
Source-tg24.sky.it