recession staved off. Italy is growing more than France and Germany in 2023 – Corriere.it

A better-than-expected start to the year, recessionary fears allayed and growth expected to continue moderately. But also a core inflation that remains high. On Monday morning, EU Economy Commissioner Paolo Gentiloni presented the EU Commission’s spring macroeconomic forecasts which estimate a growth for the EU of 1% this year (0.8% in the interim winter forecast) and 1.7% in 2024 (1.6% in the February estimates). In the Eurozone, GDP is expected to increase by 1.1% and 1.6% in 2023 and 2024 respectively. The European economy, writes the EU Commission, continues to show resistance in a difficult global context. The key factors underlying this forecast – said Gentiloni – go in opposite directions: on the one hand the drop in energy prices and the stability of the labor market, on the other the tightening of financial conditions. Upward revisions also for Italy: GDP will increase by 1.2% this year compared to 0.8% in the February estimates and by 1.1% in 2024 (against 1%). If this year we grow more than France and Germany, next year we will be bringing up the rear of the EU together with Sweden.

Inflation

EU inflation has also been revised upwards in the Eurozone compared to winter: +5.8% this year and +2.8% next (in the EU +5.8% in 2023 and +2, 6% in 2024). In Italy it is estimated at 6.1% in 2023 and 2.9% in 2023. Core inflation (overall inflation excluding energy and unprocessed food) is more persistent. It reached an all-time high of 7.6% in March, but the Commission expects it to gradually decline as profit margins absorb higher wage pressures and financing conditions tighten.

Italy

In 2023 The deficit of Italy – writes the EU Commission – should drop to 4.5% of GDP and in 2024 at 3.7%. This year’s decline explained by the partial elimination of energy support measures, which are expected to lead to a net budgetary cost of 1.0% of GDP compared to 2.5% of GDP in 2022, and the presumed complete elimination of emergency measures for Covid, which Brussels estimates were temporary emergency measures (equal to 1.1% of GDP in 2022). Primary spending expected to fall thanks the reduction of tax credits for home renovation works and the savings assumed by a new spending review equal to 0.8 billion euros (0.05% of GDP). These are only partially offset by the growth in pension expenditure due to past inflation indexation and by a recovery in investments, also driven by projects supported by the Pnrr. There interest expenseaccording to Brussels, destined to decrease this year due to the impact of lower inflation on indexed bonds and despite the increase in issuance rates, while in 2024 it is expected to increase slightly, reaching 4.1% of GDP (from 4% in 2023 ) above all due to the increase in interest rates on issue. Public debt to GDP this year expected to fall to 140.4% compared to 144.4% in 2022 but remains substantially stable next year (140.3%).