GDP and the IMF raise Italy’s estimates: it will perform better than Germany and France

The International Monetary Fund is revising its growth estimate upwards for Italy, which will perform better this year than Germany, France and the eurozone average. In fact, Italian GDP was raised by 0.4 percentage point in 2023 to +1.1%, while for 2024 that was revised up by 0.1 point to +0.9%. On the other hand, the German economy will contract by 0.3% this year. Thus, in the G7, Germany is likely to be the only country to experience a recession in 2023, while the International Monetary Fund now expects the US economy to contract by 0.3%. Instead, France in the two-year period posted +0.8 and +1.3%, respectively. Outside the eurozone, the UK will decline from +4.1% in 2022 to -0.4% in 2023 (but the figure reflects a 0.7-point upward revision), before recovering to -1.0% in 2024. The euro is expected to grow this year at +0.9%. But if Italy continues its recovery, the “locomotive” of growth in the eurozone will be Spain at +2.5% in 2023 and +2% in 2024.

Signs of healing

According to the International Monetary Fund, in general, the global economy is showing signs of slight improvement. Global growth will reach 3% in 2023, up from 2.8% in the previous April estimate, and will remain at the same level in 2024, unchanged from the previous estimate. “Our forecasts for this year are improving and inflation is declining, which is good news, but we are not out of the danger phase yet and growth remains weak, especially due to the marked slowdown in advanced economies,” Pierre-Olivier Gorinchas, chief economist of the International Monetary Fund, told AFP. Most advanced economies, as well as major emerging countries, appear to be doing better than the Fund feared, despite now restrictive monetary policy almost everywhere, to combat still “stubbornly high” inflation. Also on this front, the International Monetary Fund expects a slight improvement between now and the end of the year, with inflation expected to reach 6.8% worldwide by the end of the year, 0.2 percentage points lower than the forecast in April.

Reduce prices in China

But inflation also lasts longer: at the end of 2024 it should remain at 5.2%, while in March the institute predicted a decline of 0.3 percentage points. Gorenchas explained that the slowdown we’re seeing is largely due to price easing in China, particularly in industry in the second quarter. The IMF insists on the need for continued monetary tightening to bring inflation back toward its target, even if that means having an impact on the economy, which so far has proven to be much more resilient than expected, particularly in emerging countries.