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The Italian government’s economic growth target for this year may be harder to achieve following downward revisions by ISTAT, the country’s Central bank, and budget watchdog UPB. The revisions suggest that reaching the 1% growth target set by the government will be a challenge. The Bank of Italy’s head of economics stated that the revisions would result in a 0.2 percentage point decrease in the growth estimate for 2024. This would mean that GDP growth in Italy could be around 0.8% instead of the projected 1%.
ISTAT recently adjusted the GDP growth rates for the first and second quarters of the year, indicating a slower pace of growth. As a result, the full-year growth for 2024 is expected to be around 0.4% if there is no growth in the remaining quarters. The Treasury’s budget plan for the coming years forecasts growth rates of 1.2% in 2025 and 1.1% in 2026, but both the Bank of Italy and UPB have cautioned that these estimates are at risk of falling short.
The Central bank emphasized the importance of maintaining a prudent approach to public finances and reducing the debt-to-GDP ratio. Italy aims to reduce the budget deficit to 3.8% of GDP this year, with further decreases planned for the following years. However, small deviations from the government’s plan could make it challenging to meet the EU’s 3% deficit ceiling by 2026 as promised.
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Emma Collins, graduated in Financial Economics from the University of Chicago in the USA in 2016. She has since worked at an asset management firm in New York, where she specializes in investment strategies and portfolio management. Emma has a keen interest in financial analysis and has published several articles in renowned financial journals. Her work focuses on providing actionable insights to investors, and she is known for her forward-thinking approach to managing financial portfolios.
