Italian GDP, Istat cuts growth estimates: +0.7% in 2023 and 2024

The Institute revised downwards the forecasts for the two-year period released in June in which it indicated a gross domestic product of 1.2% in 2023 and 1.1% in 2024

Istat’s forecast indicates that Italy’s gross domestic product (GDP) should record an increase of 0.7% in both 2023 and 2024, highlighting a slowdown compared to the +3.7% in 2022. This projection is included in the report on the ‘Prospects for the Italian economy in 2023-2024’. Istat forecast growth of 1.2% in 2023 and 1.1% in 2024. Compared to the June forecasts, the institute explains, the price of oil was revised upwards (+2.3 dollars in 2023 and +9.6 in 2024), the exchange rate remained unchanged in 2023 and revised upwards by +0.01 in 2024 while world trade was revised downwards (-1.1 for 2023 and – 0.2 in 2024).

Growth supported mainly by domestic demand

In the two-year forecast period, the increase in GDP would be supported mainly by the contribution of domestic demand net of inventories (+0.8 percentage points in 2023 and +0.7 pp in 2024) against a marginally net contribution of foreign demand negative in 2023 (-0.1 pp) and zero in 2024. The contribution of inventories is, however, expected to be zero in both years. Domestic demand will be driven mainly by private consumption (+1.4% in 2023 and +1% in 2024) supported by the deceleration of inflation, a gradual (albeit partial) recovery in wages and employment growth. Investments are expected to slow down significantly compared to the previous two years (+0.6% in both years).

Svimez: “2023 growth halved in the South, incomes collapse”

According to the Svimez Report, the GDP of the South is estimated to increase by 0.4% in 2023, with growth halved compared to the Centre-North (0.8%). The national figure is +0.7%. Thus the growth gap between the territories reopens, after two years of alignment, due to the different trend in consumption. The contraction in the disposable income of southern families (-2%), moreover, is double compared to the Centre-North. Svimez predicts that GDP will grow by 0.7% at national level in 2024 (+0.7 in the Center-North and +0.6 in the South) and in 2025 by 1.2% (+1.3 in the Center North and +0.9% in the South). Growth is linked to the implementation of the Pnrr.