Italian GDP is projected to experience a growth rate of 0.7% in both 2023 and 2024, representing a slowdown compared to the figures observed in 2022 (Table 1). Throughout the two-year forecast period, the primary driver of GDP growth is expected to be the contribution of domestic demand net of inventories, contributing +0.8 percentage points in 2023 and +0.7 percentage points in 2024. This contrasts with a marginally negative contribution of net foreign demand in 2023 (-0.1) and zero contribution in 2024. The role of inventories is expected to be negligible in both years.
The internal demand, particularly influenced by private consumption, is anticipated to drive this growth, with an increase of +1.4% in 2023 and +1.0% in 2024. This is attributed to the deceleration of inflation, coupled with a gradual (though partial) recovery in wages and employment growth. Investments, while still growing, are expected to significantly slow down compared to the previous two years, with a projected growth of +0.6% in both 2023 and 2024.
Employment, measured in terms of Full-Time Equivalents (FTE), is expected to grow in tandem with GDP, with a growth rate of +0.6% in 2023 and +0.8% in 2024. This positive trend in employment is anticipated to lead to a decrease in the unemployment rate to 7.6% in 2023 and 7.5% in 2024.
Inflation deceleration, influenced by declining energy raw material prices and restrictive monetary policies implemented by the European Central Bank (ECB), is expected to moderate the dynamics of the resident household expenditure deflator, with a forecasted increase of +5.4% in 2023 and +2.5% in 2024. The forecast scenario assumes continued inflation deceleration, recovery in international trade, and effective implementation of the National Recovery and Resilience Plan in the coming months.
In November, survey signals on consumer and business confidence present mixed results. Consumer confidence increased for the first time since July, with positive impacts on personal and current climate components. On the other hand, business confidence has been declining since August, with variations among sectors, including a sharp decline in construction and market services but an increase in manufacturing and trade.
Domestic final consumption expenditure in Italy exhibited a 0.7% increase in the third quarter of 2023 compared to the previous quarter, contrasting with economic decline in other major European countries. Public Administration (PA) spending in Italy remained stable, while household consumption recorded greater growth than other main Eurozone countries. Household consumption is expected to continue growing in real terms in 2023 (+1.4%) and slightly less intensively in 2024 (+1.0%). Conversely, public administration consumption is expected to decrease in 2023 (-0.4%) and remain steady in 2024.