Italy – 2024-2025 Scenario: staying the course

Despite inflationary pressures and high interest rates, Italian growth proved "resilient" in 2023. Growth picked up slightly at the start of 2024, with a 0.3% increase in GDP, leaving an overhang of 0.6% for the year. Lower inflation combined with a stable labour market should support a modest recovery in consumption in the coming quarters, though consumer caution and a high savings rate may prevent a stronger recovery.
Business investment remains hindered by high financing costs but could benefit from the Transition 5.0 plan. The construction sector is expected to hold up in 2024 despite the end of the "Superbonus", as it will be supported by the National Recovery and Resilience Plan (NRRP), and in particular the funds allocated to public works and infrastructure projects.
Growth is expected to continue to stabilise in 2025 as household consumption firms on controlled inflation and a gradual decline in interest rates. Though business investment will benefit from the positive effects of monetary easing and stronger domestic demand, the end of the "Superbonus" will continue to weigh on the construction sector. Exports are expected to grow in step with a modest improvement in global demand, particularly from emerging markets. Italy is expected to generate moderate economic growth of close to 1% in 2025.