After +3.8% in 2022, Italy’s GDP should grow by 1.2% in 2023 (almost double what was stated on 17 March) and then to +1% in 2024 should slow down. The OECD (Organization for Economic Co-operation and Development) was presented today. The debt/GDP ratio should decrease to 140.7% in 2023 and 139.4% in 2024, after stabilizing at 144.3% in 2022. 8% last year, it should reach 3.2% in 2024. OECD projections also predict that in 2023 and 2024 the unemployment rate will remain steady at 8.1%, the same percentage as in 2022.
According to forecasts, the OECD writes that real GDP will “grow moderately in 2023-24, despite the recent decline in energy prices and the anticipated strengthening in national utilities spending.” Erosion in real incomes, inflation, the withdrawal of exceptional financial support linked to the energy crisis, and the tightening of financial conditions “are putting pressure on private consumption and investment. These headwinds are only partially offset by the fall in inflation,” he writes. OECD.
The OECD supports Italy’s policy, but calls attention to the path of Pnrr. “Delays in implementing Pnrr can reduce GDP growth,” the Paris institution writes, noting that “GDP growth could be reduced” by tightening monetary policy and reducing financial support to households and businesses in the energy sector. .
Therefore, the OECD underlines that “continuous consolidation will be necessary in the coming years to bring the debt-to-GDP ratio on a more sustainable path” and underlines that “rapid implementation of Pnrr’s structural reforms and public investment plans will be essential to sustaining business.” It is to lay the foundations of sustainable growth in the short term and in the medium term”.
Of course, the critical issues are different. The OECD writes that high inflation “erodes real incomes in the face of low wage growth.” In addition, monetary tightening and the gradual withdrawal of extraordinary financial support due to the energy crisis “put pressure on private consumption and investment”. As a matter of fact, the report emphasizes that “tightening monetary policy in the euro area led to a significant increase in the financing costs of households and businesses, with an increase of more than 2 percent in bank loan interest rates last year”.
The increase in financing costs will reduce private investment, especially in the housing sector, which will also be affected by the Superbonus squeeze. The OECD states that net exports contributed positively to growth in 2023-24, but the recent appreciation of the euro will limit further gains.
But the risks to growth are “substantially balanced,” according to the report. “Savings saved by households continue to be significant and this could support a faster-than-expected recovery in domestic demand”.
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Source: Today IT
Roy Brown is a renowned economist and author at The Nation View. He has a deep understanding of the global economy and its intricacies. He writes about a wide range of economic topics, including monetary policy, fiscal policy, international trade, and labor markets.
