The European Commission released its autumn economic forecasts on Friday, revising its projections for Italy’s GDP growth.
The Commission now anticipates a 0.7% rise in Italy’s GDP in 2024, down from the 0.9% GDP growth forecasted in May. This figure also falls short of the Italian government’s 1% growth estimate for 2024.
Projections for 2025 have been adjusted as well, with GDP growth lowered from 1.1% to 1%, while for 2026, the Commission predicts a slightly improved growth rate of 1.2%.
Public Debt and Deficit Outlook
The Commission estimates Italy’s public debt-to-GDP ratio to be 136.6% in 2024, rising to 138.2% in 2025 and 139.3% in 2026. These figures are an improvement on its spring forecasts, which had predicted ratios of 138.6% in 2024 and 141.7% in 2025.
In contrast, the Italian government’s draft budget plan projects slightly lower debt-to-GDP ratios of 135.8% by the end of 2024, 136.9% in 2025, and 137.8% in 2026.
Italy’s deficit-to-GDP ratio is expected to decrease from 7.2% in 2023 to 3.8% in 2024, further falling to 3.4% in 2025 and 2.9% in 2026. These are downward revisions from spring estimates, which forecast a deficit of 4.4% in 2024 and 4.7% in 2025. The government’s projections are slightly more optimistic, expecting the deficit to fall to 3.3% in 2025 and 2.8% in 2026.
Concerns Over U.S. Trade Policies
European Economy Commissioner Paolo Gentiloni highlighted concerns about the potential impact of the United States’ protectionist trade policies under President-elect Donald Trump’s administration. Germany and Italy, as the EU countries with the highest trade surpluses with the US, have greater exposure.
“This scenario could have repercussions,” Gentiloni stated. “The two countries with the highest trade surpluses with the US are Germany and Italy. So, there is a potential impact, especially in some countries.”
Bank of Italy Governor Fabio Panetta warned of the dangers of adopting protectionist measures as a solution to economic challenges. Speaking at a G7 conference on trade fragmentation, Panetta described protectionism as attempting to use a “kitchen knife to perform complex surgery.”
He argued that dividing the global economy into rival blocs would result in more harm than good. “The freedom to trade goods and services, to invest across borders, and to share knowledge and ideas are prerequisites for ensuring prosperity and peace,” Panetta said. He emphasised that the costs of fragmentation extend beyond economics, impacting social progress and international cooperation.
