Home » Italian GDP revised downwards. The ‘mini-blow’ of the EU Commission

Italian GDP revised downwards. The ‘mini-blow’ of the EU Commission

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Italian GDP revised downwards.  The ‘mini-blow’ of the EU Commission

The European Commission expects Italian GDP to stand at 0.7 percent in 2024, down 0.2 percent compared to what was forecast in November

The European Commission has revised its growth estimates for Italian GDP downwards for 2023 and 2024. According to the winter economic forecasts published today by the EU executive, Italian GDP grew by 0.6 percent last year, compared to 0.7 percent expected in the autumn forecast published last November. “Real GDP is estimated to have grown by 0.6 percent in 2023, marginally below the autumn 2023 forecast, as private consumption moderated and investment slowed markedly, due to rising costs financing and the elimination of tax credits for building renovations“, we read in the document published by Brussels. The European Commission then forecasts that Italian GDP will stand at 0.7 percent in 2024, down 0.2 percent compared to what was forecast in November. “After a drop in 0.3 percent in the second quarter, GDP increased in the third and fourth quarters, with a marginally positive carryover effect in 2024”, specifies the European Commission. Estimates unchanged, however, for 2025, when growth is expected of GDP at 1.2 percent.

EU: Commission revises inflation estimates, 2.7 percent in the eurozone in 2024

In the winter economic forecasts, published today by the European Commission, the EU executive expects inflation to decrease more than expected in last November’s economic forecasts. In the eurozone, the inflation rate stands at 5.4 percent for 2023, while it is forecast at 2.7 percent in 2024 and 2.2 percent in 2025. In the autumn, the European Commission forecast a rate to 5.6 percent for 2023, 3.2 percent for 2024 and 2.2 percent for 2025. In the EU, the inflation rate stands at 6.3 percent in 2023 (against the 6.5 percent forecast in November), and is forecast at 3 percent for 2024 (3.5 percent in November) and 2.5 percent in 2025 (2.4 percent in November). “The disappointing growth results in 2023 must be assessed in the context of high, albeit declining, inflation and a tightening of monetary policy. In the fourth quarter of 2022, inflation in the EU reached 11 percent percent, while inflation in the euro area was slightly lower. A year later, between October and December 2023, inflation in the EU averaged 3.4 percent. The notable drop inflation was largely determined by the decrease in energy prices (fuel, gas and electricity), as the EU managed to free itself from dependence on Russian gas”, reads the document presented by Brussels .

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Since last summer, the slowdown in inflation of food products, non-energy goods and services has also been notable. “Especially for the last two categories, the slowdown is largely due to the vigorous tightening of monetary conditions“, specifies the EU executive in the report published today. “In the 15 months between July 2022 and September 2023, the ECB increased interest rates by a cumulative 450 basis points. It was the fastest tightening cycle in the history of the euro area. Despite the rapid decline in inflation, price growth has outpaced nominal wage growth for several quarters, eroding household purchasing power and wealth and weighing on consumption growth,” the document continues. “Although the sector of businesses have withstood the subsequent shocks of the pandemic, the surge in energy prices and the increase in labor costs, the tighter credit conditions have slowed down investment growth, especially in the construction sector. On the bright side, the labor market has shown some resilience, allaying fears that political action to contain inflation could lead to job losses,” the European Commission concludes in the report.

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