Italy's Central Bank Lowers Growth Forecasts for 2024 and 2025

The Bank of Italy has revised its growth projections for the country's economy, expecting an expansion of 0.7% for both this year and next. This update, announced on Friday, represents a downgrade from the October forecasts, which predicted growth of 0.8% for this year and 0.9% for 2024.

These revised estimates fall below the Italian government's official expectations of 1.0% for this year and 1.2% for 2025. Economy Minister Giancarlo Giorgetti stated on Thursday that Italy, the third-largest economy in the Eurozone, is likely to see a growth rate of about 0.7% by the end of the year, indicating significant declines in the industrial sector.

The bank's projections are not adjusted for the number of working days per year, as consistent with international comparative practices adopted by the government, the European Union, and other international organizations. However, when such adjustments are made, the Bank of Italy indicated that growth for this year would be around 0.5%, rising to 1% for next year. This suggests that the Italian economy is expected to experience a recession in the final quarter of the year, aligning with the recent forecast from the national statistics office ISTAT for 2024.

In terms of inflation, the Bank of Italy anticipates that the average EU-harmonized inflation rate for Italy will be 1.1% this year, consistent with the October projections. Looking ahead to 2025, inflation is expected to rise to 1.5%, slightly lower than the previous forecast of 1.6%.