ISTAT Forecasts Deceleration in Italy's Economy Ahead

11 Nov, 2023

ISTAT Forecasts Deceleration in Italy's Economy Ahead

Italy's economic trajectory is anticipated to wane in the near future following a stagnant third quarter (Q3) of 2023, as communicated by the National Institute of Statistics (ISTAT) on Friday.

ISTAT noted that Italy exhibited a more favorable result compared to Germany but lags behind France and Spain, signaling a potential slowdown in the upcoming months, as revealed in its monthly report.

This downward trajectory is reflected in both consumer and business confidence indices, persisting in October. The surveys consistently portray diminishing confidence, prevailing across almost all components, ISTAT highlighted.

The global economic outlook's uncertainty, attributed to escalating geopolitical tensions and tighter financial conditions for households and businesses, is believed to be the driving force behind this negative trend, as per ISTAT.

On the production front, Italy's industrial output remained stagnant in September compared to the previous month and showed a marginal increase of 0.2 percent in Q3 compared to Q2.

Despite the economic deceleration, ISTAT pointed out that labor market conditions in Italy remained favorable. The employment rate in September saw a slight rise to 61.7 percent compared to August, while year-on-year, it increased by 1.4 points.

However, the unemployment rate also saw a marginal increase to 7.4 percent, still notably higher than the euro area average. Youth unemployment, on the other hand, decreased slightly to 21.9 percent. On an annual basis, overall unemployment and youth unemployment showed declines.

Italy, being the third-largest economy in the European Union, is expected to grow by 0.9 percent in 2023 and 0.8 percent in 2024 according to the European Commission's forecasts. However, the Italian Central Bank's projections were slightly more conservative, anticipating growth of 0.7 percent in 2023 and 0.8 percent in 2024.