The EU Commission cuts Italy’s GDP estimates

European Commission cuts GDP growth estimates for Italy downwards: 0.7% in 2024; 1% in 2025 and 1.2% in 2026. These are the figures indicated in the autumn economic forecasts. In May, with the spring estimates, growth of 0.9% was expected for this year and 1.1% for 2025. The Mef, in the budget plan, had instead indicated growth of 1 % for 2024; 1.2% for 2025 and 1.1% in 2026.

For comparison, eurozone GDP is estimated at 0.8% for ’24; 1.3% in 2025 and 1.6% for 2026. The Germania remains in suffering, for this year it is expected in recession (-0.1%, the May estimate put it at 0.1%) to gradually recover in 2025 (0.7%) and 2026 (1.3). France, on the other hand, performs better this year (1.1%) and then slows down in 2025 (0.8%) and regains momentum in 2026 (1.4).

In terms of comparison, in 2026 Italy – with 1.2% – will be last for growth at the level of the entire European Union (which will have an average increase in GDP of 1.8%). Germany will also slightly surpass it (1.3). In addition to the German economy, four other eurozone countries are in recession in 2024: Estonia (-1%; 1.1% in 2025; 2.6% in 2026); Austria (-0.6%; 1% in 2025 and 1.4 in 2026); Ireland (-0.5%; 4% in 2025 and 3.6% in 2026) and Finland (-0.3%; 1.5% in 2025 and 1.6 in 2026). The best performers this year were Spain (3%; 2.3 in 2025 and 2.1 in 2026), Greece (2.1%, 2.3 in 2025 and 2.2 in 2026) and Malta (5% this year and 4.3% the next two). Outside the eurozone, Poland leads the way with growth of 3% this year and 3.6 next year (3.1 in 2026).

In the analyzes by country, the European Commission writes that “Italian real GDP is expected to grow by 0.7% in 2024, supported by investments and the decline in imports”. “Economic activity is expected to grow by 1% and 1.2% in 2025 and 2026, respectively, as consumption increases and recovery-related spending accelerates. Inflation is expected to fall at 1.1% this year, it will rise to 1.9% in 2025 and fall slightly again in 2026.

The phase-out of substantial housing tax credits (Superbonuses) and sustained revenues are expected to push the government deficit significantly lower in 2024, to 3.8% of GDP. The deficit is expected to fall further in 2025 and 2026, to just under 3% of GDP. On the contrary, the debt/GDP ratio is expected to increase over the forecast period, reaching 139.3% in 2026 (from 134.8% in 2023), due to the delayed impact of tax credits for the restructuring of housing accumulated in the deficit until 2023.

Employment is expected to rise 1.6% this year, following 1.9% in 2023, and slow further in 2025-26. The unemployment rate is therefore expected to fall to 6.2% in 2026, from 7.7% in 2023. Nominal wage growth is estimated to rise to 4% this year, when most contract renewals will have reflected past price increases, and which will gradually moderate thereafter.

On the back of continued declines in energy prices until October 2024, headline inflation for the year as a whole is expected to fall to 1.1%. The stabilization of energy prices assumed for 2025-26 motivates modest projections for the other components of the price index, with the exception of services, where wages are expected to continue to exert upward pressure on prices. Overall inflation is forecast at 1.9% in 2025 and 1.7% in 2026.