Although the global economy will continue to see moderate growth in coming years, the diverging dynamics between the United States, the Eurozone, and emerging economies point to a scenario of uncertainty. According to the Confindustria report for autumn, 2024, titled “I nodi della competitività. La crescita dell’Italia fra tensioni globali, tassi e PNRR” (“The articulation points of competitiveness. Italy’s growth amid global tensions, rates, and the National Recovery and Resilience Plan (Piano Nazionale di Ripresa e Resilienza – NRRP)”), while the United States will see gradually slowing growth (+2.5% in 2023, +2.3% in 2024, and +1.5% in 2025), the Eurozone and the emerging economies are presenting a picture of greater stability, albeit with more moderate growth forecasts. In particular, the Eurozone should grow by 0.5% in 2023, 0.7% in 2024, and 1% in 2025 – a rate slower than global ones and those in the emerging economies, which are continuing to expand by about 4.4%.
In the European context, Italy is one of the countries grappling with the greatest structural challenges. Negatively influenced by external factors and by weak domestic demand, Italy’s Gross Domestic Product (GDP) is growing at a rate slower than the Eurozone’s average. About 0.8% growth is forecast for 2024, and 0.9% in 2025 – slightly below previous forecasts and just above the Eurozone’s, although far from pre-pandemic levels. In spite of this, the services sector is becoming a decisive factor for growth: for the first half of 2024, added value was driven by this sector, thanks to an increased real disposable income and an upturn in demand.
Growth is also supported by net exports, thanks to reduced importing and slightly increased exports, while household consumption is making a lesser contribution. After peaking in 2023, inflation is now calming down (+1.1%), but its impact has already chipped away at purchasing power, forcing Italian enterprises to raise salaries. However, the nominal increase of +4.2% forecast for 2024 is still moderate in comparison with earlier inflation.
In 2024, the Italian unemployment rate is expected to hold steady at about 6.5%, with a slight decline to 6% forecast in 2025. However, the Italian labour market is still characterized by a significant lack of skills in certain sectors and by a female and youth participation lower than the European average. Confindustria emphasizes the need for measures to improve labour participation, while at the same time increasing the presence of foreign workers given the forecasts of a declining and aging population that risks reducing supply in the medium term. This scenario is aggravated by high housing costs in the major Italian cities, which discourage workers’ mobility and exacerbate shortages of workers in high-demand areas.
In the meantime, Italian government revenues are expected to grow, reaching 46.5% of the GDP in 2024 and rising again to 47.2% in 2025. However, tax pressure will continue to weigh upon families and businesses. Thanks to the funds of the National Recovery and Resilience Plan (NRRP), government spending will maintain a certain level of support for the economy, particularly in non-residential building. However, the forecast reduction of the deficit from 3.9% in 2024 to 3.1% in 2025 remains an ambitious goal, considering the public debt.
Other critical areas relate to Italian industry, which has shown signs of weakness with production declining and with key sectors like the automotive sector in sharp retreat. In 2024, production in this sector recorded a downward trend of 26.1%, highlighting a major crisis liable to imperil overall economic growth.
Moreover, geopolitical concerns and risks continue to weigh upon the global economy and international trade, with particularly significant effects on Europe – and therefore on Italy. Energy prices that have remained relatively high and the logistical difficulties connected with the war in Ukraine and the tensions in the Middle East are having an uneven impact on industrial sectors, with particular repercussions on the European manufacturing industry which depends heavily on the importing of raw materials.
To conclude, according to Confindustria, the Italian economy is at a crossroads, with moderate growth prospects and signs of recovery in consumption and investment that require a framework of favourable credit and stable international economic conditions.
