Italy’s business sector has further downgraded its economic outlook, according to the Bank of Italy’s latest Inflation and Growth Expectations Survey, released on Tuesday. Istat also released their note on the Italian economy for November and December.
The percentage of companies reporting negative assessments of the general economic situation increased to 30% in the fourth quarter of 2024, up from 21% in the previous survey. Meanwhile, those expecting an improvement fell to just 5%, down from 6%.
This grim outlook comes amid a mixed performance in Italy’s industrial sector. Istat reported a 1.5% decline in the calendar-adjusted industrial production index for November 2024, marking the 22nd consecutive year-on-year decrease. However, the seasonally-adjusted month-on-month index showed a slight recovery, rising by 0.3% compared to October.
While the global economic outlook for 2025 remains optimistic, with growth differentials between the U.S. and the euro area narrowing, uncertainty persists. Geopolitical tensions and the future direction of U.S. trade policy contribute to this ongoing uncertainty. In Italy, the industrial sector showed a slight acceleration in growth, excluding capital goods. Despite this, the overall trend remains negative when looking at the quarterly moving average.
Mixed trends in Italian economy
Trade data for the first ten months of 2024 reveal a slight decline in export values, driven by reduced export volumes, although average unit values saw an increase. Italy’s trade balance improved significantly, exceeding 45 billion euros during this period.
Employment trends in November were mixed. The number of employed and unemployed individuals both decreased, while the inactive population increased. Italy’s unemployment rate remained lower than the euro area average, at 5.7%, compared to 6.3% in the eurozone. Employment for women, permanent employees, and individuals aged 35 and over increased, but there was a decline in employment among men, temporary workers, and younger people.
The Italian economy was showing mixed signals in Q3 of 2024 with GDP remaining unchanged. Q4 followed a similar pattern.
Inflation in Italy remained below the euro area average in December, with the Harmonized Index of Consumer Prices (HICP) rising by 1.4% year-over-year. This was a sharp drop from the 5.7% inflation recorded in 2023. Additionally, household purchasing power continued to recover, though at a slower pace in the third quarter of 2024, with a modest 0.4% increase compared to the previous quarter’s 1.1%.
Consumer confidence in Italy worsened for the third consecutive month in December, while business confidence rebounded after two months of decline, largely due to an uptick in the market services sector.
The outlook for Italy remains cautious, with persistent challenges in industrial performance and employment trends offset by a positive trade balance and lower inflation.
