Italy’s gross domestic product (GDP) remained unchanged from the previous quarter in the final three months of 2024, according to a preliminary report, consistent with the stagnation observed in the previous quarter.
Italy GDP stalls for second consecutive quarter
This outcome contrasted slightly with market expectations, which had anticipated a modest 0.1% expansion. The stagnation was attributed to a broad recovery in the Italian industrial sector, which was offset by weaker performance in both the primary sector (agriculture, mining, and utilities) and the services sector. The resilience of the industrial sector helped cushion the overall impact, but it was not enough to push the economy into growth during the quarter.
Expectations for 2024
The data suggests that Italy’s economy would expand by 0.5% for 2024, in line with the expectations of the Italian statistical authority and the Bank of Italy. However, this growth rate fell short of the European Commission's forecast of 0.7%, indicating that Italy's recovery continues to face challenges despite the improving industrial performance. The Italian economy has been struggling with persistent structural issues, including low productivity growth, an aging population, and political uncertainties, all of which have weighed on broader economic expansion.
Bank of Italy remains cautiously optimistic
Looking ahead, the Bank of Italy remains cautiously optimistic, projecting that the Italian economy will accelerate in the coming years. It expects GDP to expand by 0.8% in 2025 and 1.1% in 2026, as improvements in global demand, ongoing investments, and structural reforms begin to take hold. However, the pace of recovery will likely depend on how Italy navigates its fiscal and structural challenges while also responding to broader global economic trends. With the Italian economy still facing significant headwinds, it remains to be seen whether the projected growth rates will be achievable, and how external factors, such as EU economic policies and global trade dynamics, will influence the country’s recovery trajectory.
