GDP, Bank of Italy: “Growth prospects remain limited and subject to external risks”

Milan, Nov. 21 (LaPresse) – “The growth prospects of the Italian economy remain limited and subject to risks mainly linked to external factors. On one hand, the resilience of labor incomes, low unemployment, a largely creditor net foreign position, and contained private debt represent strengths. On the other hand, high public debt remains a factor of vulnerability. To ensure a significant reduction in its ratio to output, it will be necessary to combine concrete actions to support growth with the maintenance of prudent public finance management, one of the elements behind recent upward revisions of the Country’s credit rating.” This is stated in the Financial Stability Report of the Bank of Italy, released for the second time this year after the April edition. The strengthening of investment, driven especially by the National Recovery and Resilience Plan (PNRR), would be accompanied by weak exports, negatively affected by protectionist policies and the appreciation of the euro. In 2025-26, consumer inflation would rise from 1.1 percent to slightly above 1.5. According to the 2025 Public Finance Planning Document (DPFP), in the current year the net borrowing of Public Administrations will fall to 3 percent of GDP, while the primary surplus will rise to 0.9. Net borrowing will gradually decrease in the 2026-28 three-year period and the primary surplus will further improve. The debt-to-GDP ratio will go from 134.9 in 2024 to 137.4 percent at the end of 2026, also due to the cash impact of the Superbonus; it will begin to decrease from 2027. The dynamics will also be affected by the differential between the average cost of debt and the nominal GDP growth.