Italy: GDP inches higher but deficit comes in far worse than forecast

Rome: Italy’s economy grew by 0.9% last year, exceeding a 0.7% forecast, the national statistics agency ISTAT confirmed on Friday.

This modest victory was nonetheless tempered by a disappointing deficit figure for 2023, which came in at 7.2% of gross domestic product (GDP).

The government had pencilled in a deficit of 5.3% for last year, although it was recorded at 8.6% in 2022.

In response to the figures, Italy’s Minister of Economy and Finance, Giancarlo Giorgetti, placed some of the blame on the “irresponsible” superbonus scheme, a policy that helps Italians to renovate their homes through tax subsidies.

Introduced by Giuseppe Conte’s government in 2020, the superbonus initiative has already been blamed by Italy’s current Prime Minister, Georgia Meloni, for wrecking public finances.

Looking ahead, Giorgetti argues that “public finances will embark on a path of reasonable sustainability from 2024”.

ISTAT also released inflation data for Italy on Friday, showing that prices in February rose by 0.8% year-to-year and 0.1% over the month.

Items that drove the monthly increase include tobacco products and services related to transport and communication.

Core inflation, which doesn’t include net energy costs and fresh food, showed a 2.4% increase year-on-year, down from 2.7% in January.

The Harmonised Index of Consumer Prices, which is an adjusted figure used to compare inflation across the eurozone, showed an annual rise of 0.9% and a monthly upturn of 0.1%