According to Italy’s National Institute of Statistics (Istat), the Italian economy grew by 0.7% in 2023, more than what was estimated in 2021 and 2022. As a result, total GDP volumes stand higher than the historical highest achieved in 2007, before the financial crisis. Although this should be considered “good news”, as stated by Samy Chaar of Lombard Odier, leading to a reduction in Italy’s public deficit, the optimistic outlook should not be overstated.
In fact, other European countries reached pre financial crisis GDP levels years in advance: France and Germany did it in 2011, while the UK achieved this milestone in 2014. According to Nicola Nobile, economist at the Consultancy Oxford Economics, the 2015-2019 recovery was not strong enough to bring output back to pre financial crisis levels until just last year.
According to Samy Chaar, the stagnant productivity of the Italian economy is given by a lack of investment and innovation, restrictive policy, and an aging population along with very low fertility rates.
Although Italy benefited from its tax relief on home improvements implemented in 2020, as well as from a reduction in inflation since 2022 and the Next Generation EU investment program, the country still faces structural problems that might lead, in the medium term, to a path of subdued growth.
Author: Luis Cabezas
Photo: Freepik