(Finance) – The GDP of the Italian economy recorded an increase of 0.9 percent in 2023, being higher than the euro area average (0.4) for the third consecutive year. The Parliamentary Budget Office writes this in the Note on the April economic situation, underlining that the expansion in Italy was supported mainly by services and construction, with a contribution to demand given above all by private consumption and investments, both in construction and in capital goods. In the final part of the year, the cyclical phase was moderately expansionary although almost entirely driven by construction, in view of the expected reduction in the super bonus.
In the short term “a cyclical phase still slightly expanding is expected. According to estimates by the Parliamentary Budget Office, in the first quarter of 2024 Italy would have grown at a moderate pace: GDP would have increased by 0.2 percent, a growth similar to that of the two previous periods but with the possibility of wide fluctuation both upwards (0.4) and downwards (0,0). The uncertainty in the forecasts is also large in relation to the recent revision of the national accounts data and the difficulty of quantifying investments in the construction sector. However, the January construction production figure was very high. In the medium term, downside risks remain prevalent, linked above all to strong geopolitical tensions.”
The note notes that “the international scenario remains unstable and uncertain due to the various conflict situations on multiple geopolitical fronts. Intercontinental transport and therefore the exchange of goods are slowing down; The prices of some raw materials, in particular crude oil, are also affected. For now, tensions in maritime transport in the Red Sea appear to have a limited impact on the rise in prices. Despite these obstacles, global trade forecasts predict a strengthening in the coming quarters even if demand remains weak. Prospective inflation should further ease as tensions on the prices of energy and agricultural goods recede; the decline in inflation in recent months has been characterized by different paces between the United States and the euro area, where the deceleration in prices has been more rapid.
An easing of monetary policy is expected in the coming quarters, the exact timing will depend on the macroeconomic data that gradually becomes available. Overall, the uncertainty about the global picture is such that new upside risks to inflation cannot be ruled out.”