Gentiloni Expresses Surprise Over Q2 Slowdown in Italian Growth

12 Sep, 2023

Gentiloni Expresses Surprise Over Q2 Slowdown in Italian Growth

Italy experienced an unexpected deceleration in its GDP growth during the second quarter of 2023, as disclosed by Paolo Gentiloni, the European Commissioner for Economic Affairs. This revelation was made during a presentation of the European Union's Summer 2023 Economic Forecast held in Brussels.

Gentiloni noted, "Italy witnessed an unforeseen downturn in growth during the second quarter, marked by a contraction of 0.4%, primarily attributed to a decline in domestic demand." He elaborated on this disappointing trend, emphasizing that it posed a challenge to Italy's economic outlook.

Furthermore, Gentiloni indicated that while a marginal resurgence is anticipated in the latter half of the current year and the subsequent year, the overall annual growth projections have been revised downwards since the spring period, reflecting the uncertainty surrounding Italy's economic trajectory.

In line with the updated European Union forecast, it is now anticipated that the Italian GDP will expand by 0.9% in 2023, representing a downward adjustment from the prior projection of 1.2%. Similarly, the outlook for 2024 has been adjusted to an estimated growth rate of 0.8%, down from the previous 1.1% forecast.

Gentiloni also touched upon the broader European economic landscape, emphasizing the persistently high levels of uncertainty. He attributed this uncertainty largely to the ongoing conflict between Russia and Ukraine, which has generated significant economic reverberations throughout the region.

Commenting on potential policy actions, Gentiloni cautioned that the tightening of monetary policies might have more pronounced adverse effects on economic activity than initially anticipated. However, he also highlighted a silver lining, suggesting that such policies could trigger a more rapid decline in inflation rates, which, in turn, could accelerate the recovery of real incomes for individuals and households.

The remarks made by Gentiloni underscore the challenges and complexities currently facing Italy's economic growth trajectory, as well as the broader European economic landscape shaped by geopolitical factors and policy considerations.