Bank of Italy revises 2023 GDP upwards, 2024-25 files. Inflation slows with lower energy prices
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The Bank of Italy is revising GDP upwards for 2023 which should have increased by 1.3% versus +0.6% estimated in January. However, in macro projections made within the European Central Bank’s European system, the economy should expand to a limited extent in the rest of the triennium, due to the effects of worsening financing conditions. For the next year, GDP will increase by only 1% (it was 1.2% in the January estimate) and 1.1 in 2025.
Home consumption in content expansion
In the report, the bank stresses the high level of uncertainty that continues to affect all estimates. The report notes that “after the decline recorded at the end of last year, household consumption is expected to expand to a limited extent during the three-year forecast period, at rates similar to those of the producer.”
Contracting investments
“Investments will slow down significantly, due to higher financing costs and more stringent conditions for obtaining credit; On the other hand, the momentum generated by the general component will increase thanks to the interventions of Pnrr ».
Construction spending is still growing this year
He added, “Spending on residential construction – he adds – will rise again in the current year, benefiting from some remaining support measures for the sector, and then decline in the following two years. Exports are expected to expand at low rates over the three-year period, in line with the trend of foreign demand. Imports will grow to a lesser degree due to the weak demand for investments in capital goods, which is characterized by a high proportion of imported products.
Inflation slows with lower energy prices
“Energy prices falling faster than expected” will curb the inflationary race. This is estimated by the Bank of Italy in the macro forecasts made within the European Central Bank’s European system, thus revising the price direction downwards. Consumer inflation is expected to average 6.1% this year, and will drop to 2.3% next year and 2% in 2025. Compared to the forecast published in January, the decline is about 0.3 percentage points. Core inflation is expected to remain high this year, and to decline over the next two years, with a gradual transition to lower energy costs.
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