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Italy's GDP will rise to 1,2 percent in 2025

This is what we read in the OECD Economic Outlook

Paris
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Italy's GDP will slow down to 0,7 percent growth in 2023 and 2024 before rising to 1,2 percent in 2025. This is what we read in the Economic Outlook of theOECD. Low wage growth and high inflation have eroded real incomes, financial conditions have tightened and most of the exceptional fiscal support linked to the energy crisis has ended, a development weighing on private consumption and investment, reports l 'OECD


“The expected decline in inflation, targeted income tax cuts and the recovery of public investments linked to the Next Generation Eu will only partially compensate for these obstacles,” the analysis reads. According to the OECD, the main risk "is a greater than expected tightening of financial conditions due to the more restrictive monetary policy of the euro area or an increase in the risk premium on Italian government bonds". The positive aspect, according to the Paris-based organisation, is "the significant recovery in public investments linked to the National Recovery and Resilience Plan (PNRR) which could stimulate growth in 2024 and 2025".

According to the OECD analysis, “the effects of the tightening of monetary policy have started to be felt, while fiscal support for families and businesses to address the energy crisis has been reduced, although the latter is largely compensated by targeted cuts of income taxes and increased spending related to Pnrr”. The essentially neutral stance of fiscal policy, according to the organization, “will limit the slowdown in growth, but there is room to improve the budget balance more quickly than currently expected to bring public finances back to a more prudent path.” According to the OECD, public spending must be contained while "the rapid implementation of public investment plans and the structural reforms present in the Pnrr will be fundamental to support growth and reduce the debt-to-GDP ratio".

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