GDP, EU Commission lowers growth estimates for Italy (+0.7% in 2024) and Eurozone (+0.8%)

Accelerating investments in Italy in 2025

Investment is expected to accelerate in 2025 as the implementation of projects supported by the National Reform and Reconstruction Program accelerates, stimulating infrastructure spending and the purchase of tangible and intangible assets of companies, which are also expected to benefit from improved financial conditions. This increase in capital spending is expected to translate into stronger growth in imports, above expectations of a slight improvement in exports. As for inflation, it declined steadily last year compared to the peak it reached in 2022, driven by the rapid decline in energy prices that is gradually transmitted to other goods, but also due to limited increases in services inflation. Inflation fell to 1% year-on-year in the fourth quarter of 2023 and remained below 1% in January. Moderate wage increases so far have helped keep prices under control. With the gradual renewal of major collective labor agreements, workers are expected to regain their previous losses in purchasing power.

Lowest GDP growth in Germany in 2024, 0.3%

And unlike in 2023, no country in the eurozone (and even in the entire European Union) will find itself in recession this year and next. Last year, Germany, Estonia, Ireland, Latvia, Lithuania, Luxembourg, Austria and Finland recorded negative growth. In 2024, Germany will take the lead as the least developed economy in both the eurozone and the EU: 0.3%, followed by (in the eurozone) the Netherlands with 0.4%; Estonia, Austria and Finland by 0.6%. Italy will grow by 0.7%, France by 0.9%, and Spain by 1.7% (good growth trend confirmed that will continue from 2021), the highest growth rate among the continent's large economies. In 2025, Italy and Germany, with a GDP growth rate of 1.2%, will occupy last place, followed by France (1.3%) and the Netherlands (1.4%). Spain will grow by 2%.

Shy signs of recovery

Even if previous increases continue to take their toll and prevent the economy from seeking recovery, signs of recovery are already evident. Between December and January, new orders continued to increase in both manufacturing and services, and lower mortgage rates revived loan applications from households and businesses. Some signals also come from industrial production, which rose unexpectedly by 2.6% in the euro zone in December, while all analysts expected it to fall. It is a figure that must be treated with caution, because it captures the very volatile situation in Ireland, where industrial production jumped by 23.5% at the end of the year.

Downward revisions of key institutions

The road to regaining lost momentum therefore remains long and highly uncertain. For this reason, in December the European Central Bank revised the 2024 GDP from +1% to +0.8%, the IMF from +1.2% to 0.9%, and for the OECD it also decreased to +0.6%. “The unprecedented shocks of recent years have had profound effects on medium-term growth, which remains low and declining,” the ECB Vice President said. Luis de Guindoswhich finds that potential growth in the euro area is also expected to slow.

Germany lowers growth forecast from +1.3% to +0.2% in 2014

Germany knows something about this, having already fallen into recession and been forced to lower its growth forecast for this year from 1.3% to 0.2%, as the Minister of Economy announced. Robert Habeck.