Italy's Economic outlook 2024-2025

The Italian GDP is expected to grow by 1% in 2024 and by 1.1% in 2025, showing a moderate acceleration compared to 2023.

In 2024, the GDP growth rate will be supported by the contribution of both domestic demand net of inventories and net foreign demand (+0.7 percentage points each), with a still negative contribution from inventories (-0.4 p.p.). In 2025, the growth of the Italian economy will be predominantly driven by domestic demand (+0.9 p.p.).

Private consumption continues to be supported by the strengthening labor market and by the real wages increase. These dynamics will lead to a growth of +0.4% of household consumption in 2024 and +1% in 2025.

Gross fixed investment growth rate is expected to decelerate during the forecast period (to +1.5% and +1.2% in 2024 and 2025, respectively, from +4.7% in 2023), driven by the phasing out of fiscal incentives for construction, which will be offset by the effects of the implementation of the new measures under the PNRR and by lower interest rates.

Employment, measured in terms of FTE, will grow in line with GDP (+0.9% in 2024 and +1.0% in 2025), accompanied by a decrease in the unemployment rate (7.1% this year and 7.0% in 2025).

In the coming months, a gradual return to inflation rates closer to the ECB targets is expected; this trend will lead to a sharp deceleration in the household spending deflator (+1.6% in 2024, down from +5.2% in 2023), followed by a moderate increase in 2025 (+2.0%).

The forecast scenario remains characterized by the persistence of high uncertainty in the international framework, determined by the evolution of geopolitical tensions.