Half full (or half empty) growth

On the same topic:

In its “outlook for the Italian economy,” Istat forecasts that GDP will grow by 0.6 percent this year and 0.8 percent next year, more or less in line with the 0.7 percent of the previous two years. Economic growth should be supported entirely by domestic demand (+0.8 and +0.9 points, respectively), while foreign demand would contribute a negative amount (-0.2 and -0.1 points, respectively). The damage caused by U.S. tariffs, both directly and through the global effect of restricting international trade, is all in all limited, also because the climate of uncertainty regarding the Trump Administration’s trade policy is expected to ease (a gamble, rather than a forecast). Growth will therefore be driven by private consumption (+0.7 percent in both years), favored by the increase in wages due to contract renewals and by the increase in employment, despite an increase in the savings rate due to uncertainty . Employment will continue to grow faster than GDP (+1.1 percent in 2025 and +1.2 percent in 2026), although slowing down compared to previous years.

On the other hand, investments are accelerating (+1.2 and +1.7 percent compared to +0.5 percent in 2024) for the final rush of the PNRR. There are two interpretations. The glass is half full if we consider that Istat's forecasts coincide with those of the government and indicate, despite the enormous international tensions, a substantial continuity of growth in GDP and employment. The glass is half empty if we consider that Italy has returned to its growth standard below the European average: according to the EU Commission's forecasts, the Eurozone's GDP will grow by 0.9 percent in 2025 and by 1.4 percent in 2026. Furthermore, of the 0.6 percent growth forecast for 2025, 0.5 points are the growth acquired in the first quarter: this means, in essence, that in the rest of the year the GDP will be flat.

More on these topics: