Italy Current Account Balance (EUR bn)

Available data for the current quarter is mixed, following a marginal contraction of the economy in Q4. Industrial production fell month on month in January. Moreover, financing conditions tightened, and inflation remained elevated in January and February, although it moderated from Q4. On the other hand, retail sales rebounded sequentially at the outset of the quarter. This, coupled with stronger consumer sentiment in January-February suggests improving spending dynamics. Additionally, higher business sentiment and PMI readings in the same two months bode well for private sector activity. Meanwhile, the government recently announced it would scale back its basic income scheme, which will support labor supply. Moreover, in mid-March it triggered the first phase of an overhaul to simplify the tax system, boding well for hiring and investment.