In 2024, the GDP growth rate will be bolstered by contributions from both domestic demand net of inventories and net foreign demand, each contributing 0.7 percentage points. However, inventories will continue to have a negative impact, contributing minus 0.4 percentage points. The following year, the Italian economy's growth will be predominantly driven by domestic demand, contributing 0.9 percentage points.

Private consumption is set to remain robust, supported by a strengthening labour market and increases in real wages. These factors are expected to lead to a growth in household consumption of 0.4 per cent in 2024 and 1 per cent in 2025.

However, the growth rate of gross fixed investment is projected to decelerate during the forecast period, from 4.7 per cent in 2023 to 1.5 per cent in 2024 and 1.2 per cent in 2025.

Employment, measured in full-time equivalents (FTE), is anticipated to grow in tandem with GDP, with increases of 0.9 per cent in 2024 and 1 per cent in 2025. This growth will be accompanied by a slight decrease in the unemployment rate, which is expected to drop to 7.1 per cent this year and 7 per cent in 2025.

In terms of inflation, a gradual return to rates closer to the European Central Bank (ECB) targets is anticipated in the coming months. This trend will result in a sharp deceleration in the household spending deflator, from 5.2 per cent in 2023 to 1.6 per cent in 2024, followed by a moderate increase to 2 per cent in 2025.

Despite these positive projections, the forecast scenario remains clouded by high uncertainty in the international framework, primarily due to evolving geopolitical tensions. This uncertainty could potentially impact the economic outlook and should be closely monitored in the months ahead.

Fibre2Fashion News Desk (DP)