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Italy GDP Q1 2024

Italy: Growth accelerates in Q1

GDP expanded 0.3% in seasonally adjusted quarter-on-quarter terms in Q1 2024 from the previous quarter, accelerating from Q4 2023’s 0.1% uptick and beating market expectations. Compared with Q1 2023, GDP increased 0.6% on a seasonally adjusted annual basis in Q1, following the 0.7% rise recorded in the previous quarter.

Looking at the breakdown of the quarter-on-quarter growth figure by expenditure, the statistical office said that domestic demand including inventories detracted from the final reading, while external demand made a positive contribution. Sector-wise, the primary sector, secondary and tertiary sectors all expanded.

A more detailed breakdown will be made available on 1 June.

This year, GDP should expand at an underwhelming pace. Industrial production should contract less, underpinned by stronger foreign demand, and EU funds disbursement should support activity further. However, waning savings and still-high interest rates will restrain growth. A heavy public debt and rising debt-servicing costs, coupled with a possible reignition of financial turbulence, pose downside risks to the outlook. Pro-market policies from the center-right government pose upside risks.

Commenting on the outlook, EIU analysts stated:

“[In 2024] economic activity will be held back by interest rates in the euro zone remaining at a record high until at least June 2024 and a subdued external environment. Nonetheless, easing inflationary pressures and a rebound in real wages should underpin a modest expansion in private consumption.”

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