Fitch has slightly reduced its growth forecast for Italy and now expects a Growth of 0.9% in 2023 And by 1% in 2024. AND what we read in the Global Economic Outlook report updated in September.
The rating agency explains that the reduction in forecasts is due to a. attributed worse than expected result in the second quarter 2023, when GDP contracted by 0.4%, with a Stagnation in consumption of families. Retail sales volume was 0.6% lower in the May-July period compared to the previous quarter.
“The increase in investments, favored by tax breaks for housing investments that are about to expire, explains about half of Italy’s growth in 2021 and 2022, much more than in eurozone countries. The end of this boom (which was expected) suggests an end to a slowdown in growth,” explains the agency.
L’Increase in interest rates and the tightening of credit conditions will also weigh on investment and consumption, according to Fitch, even though growth in loans to families in Italy has long been limited. The credit to
Families to GDP in Italy is 40.8%, compared to the Eurozone average of 56%.
Investment in machinery and equipment continued in the second quarter of 2023, but construction activity declined. The agency is planning another one Investment growth in 2023 and 2024in the hypothesis that public sector investments can take the baton from families.
This assumes that Italy can reap some benefits from the investments contained therein National Resilience and Recovery Planbut the agency revised its expectations downward, explaining part of the downward revision in GDP growth for 2023.
Also the IMFhad pointed out possible downside risks for the Italian economy in recent weeks.