(Finance) – The Bank of Italy confirmed the economic growth forecast for the Peninsula at 0.6% for this year, while it has revised upwards, in both cases by 0.1 percentage points, the estimate for 2025 to 1% and that for 2026 to 1.2%. The new figures are contained in a box in the latest economic bulletin. The revisions, compared to previous estimates, which date back to June, reflect “the impact of the expansionary measures outlined in the Medium-Term Budget Structural Plan (PSB) and the effects of more favorable hypotheses on financial conditions”, explains the institution. It should be noted that the growth estimates cited above are corrected for the number of working days. Without this correction, specifies Bankitalia, GDP would grow by 0.8 percent in 2024by 0.9 percent in 2025 and 1.3 percent in 2026. In Italy, activity would be supported “mainly by consumption, driven by the recovery of real incomes – continues Bank of Italy – and by exports, in the presence of a increase in foreign demand”. Instead, a dampening effect should result from the weakening of investments in housing due to the reduction in incentives for residential construction. Bank of Italy warns that the projections “are burdened by very high uncertainty at a global level. The weakness of the Chinese economy, the continuing conflicts in Ukraine and the Middle East and a possible worsening of international trade tensions could hinder the recovery of world trade and translate into a deterioration in the confidence of families and businesses. Domestic demand – we read – could also be affected to a greater extent than expected by still restrictive monetary and financial conditions, as well as by the progressive reduction of incentives for the redevelopment of homes”.
Upward magazines the forecast for the Peninsula’s labor market, for which it now expects an unemployment rate of 6.7% this year, one percentage point less than in 2023, and then a further decline to 6.3% in 2025 and 6.2% in 2026. The estimates are contained in a box included in the latest economic bulletin. Last June, Bank of Italy forecast unemployment at 7.3% for all three years under review. For employment, in terms of the number of employed people, it now estimates growth of 1.7% this year, +0.9% next year and +0.6% in 2026. Last June it indicated +1 % this year, +0.3% next year and +0.5% the following year
Although the expansion in the number of employed continued in the summer months in Italy, “some signs of weakening in demand for labor are emerging: vacancies have decreased and hours worked have decreased in the second quarter”. The Bank of Italy notes this in the latest Economic Bulletin, noting that participation fell slightly in the summer, contributing to the decline in the unemployment rate. In the meantime “the recent contractual renewals are favoring a gradual recovery of real wages”, adds the institution.
However, the forecasts for household consumption have been revised downwards, for which it now estimates a contraction of 0.1% this year, compared to the 0.2% increase indicated last June. A plus 1% is expected for 2025 and a plus 1.3% for 2026; the figure for next year was reduced by 0.2 percentage points
In Italy “financing conditions for families and businesses benefited from the reduction in the cost of bank funding. Despite a slight easing of supply criteria in the spring, bank loans to non-financial companies continued to contract, mainly due to the lower demand for investment credit”. The Bank of Italy notes this in the latest Economic Bulletin. The institution instead reports that “the decline in loans to families has stopped and, albeit marginally, has started to expand again for the first time since the beginning of 2023
Bank of Italy also reports “After an improvement in spring, signs of a slowdown in the world economy are emerging, especially due to the weakness of manufacturing. In the United States, activity remains robust; the job market is cooling slightly.”
In China, the lack of strength in domestic demand, which continues to be affected by the crisis in the real estate sector, is slowing down product growth. According to the OECD’s September estimates, the increase in global GDP will be just above 3 percent in 2024 and 2025, in line with last year’s figure, but below the average recorded in the decade preceding the pandemic. According to our assessments, continues Bank of Italy, on average in 2024 international trade will expand more slowly than product.
Meanwhile, the substantial stagnation of the euro area GDP continued in the summer months: the manufacturing cycle remained weak, while the expansion of services continued, especially reflecting the good performance of the tourist season. In September, inflation continued to decline, even in the underlying component. The dynamics of service prices remains high, underlines Bank of Italy, in particular those that adapt with delay to past inflation. According to the September projections of the ECB experts, consumer inflation will decrease progressively, from 2.5 percent on average for the current year to 2.2 in 2025 and 1.9 in 2026.