Italy counts on 1.2% GDP growth in 2023

Rome: The growth outlook for Italy’s economy continues to improve, although major challenges, including unusually high prices, are expected to last through the end of this year, the country’s main statistical entity said.

The National Institute of Statistics (ISTAT) said in its “Prospects for the Italian Economy in 2023-2024” report that gross domestic product (GDP) is projected to grow by 1.2 per cent this year and by 1.1 per cent in 2024, reports Xinhua news agency.

Both figures are well below the 3.7 per cent growth rate registered in 2022, but above ISTAT’s earlier estimates for both years.

The estimate also shows that the economy is expected to continue its recovery from its 0.1 per cent contraction in the final quarter of 2022.

ISTAT data released last week showed that the economy grew by 0.6 per cent in the first quarter of 2023, meaning that the country has avoided a technical recession, which is defined as two consecutive quarters of negative growth. Combined with the projection for the full year, economic growth should speed up.

Inflation, though decreasing, is expected to remain above historic levels through 2023.

The downward trend of inflation, driven by the drop in energy prices and by the restrictive policies of the central bank, will be reflected in a reduction in the dynamics of the spending deflator of resident households (5.7 per cent this year and 2.6 per cent in 2024), according to the agency.

“The forecast scenario is based on favourable hypotheses regarding the path of price reduction in the coming months,” ISTAT said, pointing to downward risks for the economy if inflation is higher than expected.