Italy Unemployment (% of active population, aop)

Unemployment Rate in Italy

GDP dodged a technical recession in Q1, as both the external sector—thanks to a strong Easter season—and domestic demand fueled growth. Household spending likely continued to expand, benefiting from stronger consumer sentiment, although still-high inflation should have limited the scope of the increase. Additionally, business sentiment improved notwithstanding tight financing conditions, which should have underpinned investment activity. Meanwhile, the government recently confirmed a reduction of its fiscal deficit target to 4.5% for 2023. Moreover, it approved tax cuts to employees with low to middle incomes, loosened rules on short-term job contracts and scaled back a ‘citizen wage’ unemployment benefit. Lastly, on 21 April, S&P maintained Italy’s rating outlook as stable, citing an expected decline in public debt as a positive factor but highlighting risks of failing to deliver critical reforms.