Real GDP growth of 3.8% in 2022 and 0.6% in 2023, with an inflation rate that will go from 8.2% in 2022 to 7.1% in 2023: these are EY estimates for Italy included in the EY Italian Macroeconomic Bulletin, a new tool that will be released on a quarterly basis and will explore the global, European and Italian macroeconomic scenario. A proprietary macroeconometric model built by EY in collaboration with the Department of Economics of the University of Bologna.
Mario Rocco, EY Partner, Valuation, Modeling and Economics Leader, outlined the more general context as follows: «The Italian economy showed strong dynamism in the first three quarters of 2022, driven above all by the domestic demand for household consumption and investments , continuing along the path of recovery from the pandemic crisis that had already begun in 2021. However, the indicators outline an uncertain outlook for the current quarter and for subsequent ones, as a consequence of high inflation and its effect on the real disposable income of households and on business costs”.
It should be remembered that global GDP growth is expected to be 1.3% in 2023, compared with an average growth of 2.7% in the last 10 years and 3.1% in 2022. On the inflation front, however , the OECD average expected for 2022 is 9.4%, against 1.6% in the 2013-2019 period.
The role of the PNR
«Consumption is expected to remain stable during 2023 and exports, even if slowing down, will once again make a net positive contribution to growth. As regards investments, they will be growing but we estimate a slowdown due to a weaker and more uncertain economic situation and higher interest rates; the Pnrr will play a fundamental role in keeping the GDP on a path of growth», added Rocco.
Consumption and exports
The EY econometric model estimates that the slowdown in economic growth experienced in the third quarter of 2022 will be followed by a slight contraction in the fourth quarter, mainly due to the significant reduction in household consumption, which is weighed down by the reduction in real disposable income. Consumption is also expected to contract in the first quarter of 2023, to then remain stable in 2023. These dynamics are also reflected in the trend in demand for foreign goods (imports), which is also expected to slow down in 2023. Export growth will be cushioned due to the slowdown in the global economy, but will return to making a net positive contribution to growth. With reference to the consumer price index, an easing of pressures along the supply chains and the reduction of pressures on energy prices will lead to a reduction in the inflation rate, which will however remain significantly higher than the objective of stability of ECB prices (2%) and far from pre-pandemic levels.