The EU cuts growth estimates for the Eurozone and Italy

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The EU cuts growth estimates for the Eurozone and Italy

The economic stagnation at the end of '23 translated into a weak momentum at the beginning of '24 and the European Commission revised downwards its growth estimates in the Eurozone and the EU, also reducing them significantly for Italy. However, the expectation is for a gradual acceleration over the course of the year, with then more stable growth in '25. It is however possible and it is “our responsibility” to achieve “sustained and sustainable growth”, underlined the EU Commissioner for Economy Paolo Gentiloni, warning that “uncertainty remains exceptionally high” due to the “prolonged geopolitical tensions” on ” risk of a further widening of the crisis in the Middle East”. Italy has data “in the European average and therefore can have confidence” in a recovery of activity, but “the set of reforms and investments of the Pnrr is very important”.

In the euro zone the expectation is therefore for an economy to expand by 0.8% in '24 (from the 1.2% previously expected), after +0.5% last year and growing by 1 .2% in '25 (from +1.6%). In the EU, GDP is expected to +0.9% in '24 (from +1.3%) and +1.7% in '25 (unchanged estimate). For Italy the reduction is from the +0.8% indicated in November to 0.7% for this year, with a GDP that will then rise by 1.2% in '25 (confirmed).
Italy will do worse than France (+0.9%) and Spain (+1.7%), but better than Germany which will rise by a modest +0.3%, with a clear cut in previous estimates (+0. 8%). The contraction in Germany in the last quarter (-0.3%, after a GDP that was stagnant for two quarters) has largely determined the stagnation of the Eurozone, as emerged from the Commission's analysis. “It has structural challenges” but “it can emerge from the negative crisis” of 2023, Gentiloni said. “Each of us must also face the problems” that we have “at home” of “reforms and investments and not just look at the progress of our neighbors, as has occasionally been done to the detriment of Italy”, added the commissioner.

Great Britain, we learned today, entered a technical recession in the fourth quarter of '23, with a contraction of 0.3% in the last three months of the year, after the -0.1% recorded between August and September.
As for inflation, it is expected in '24 in the Eurozone at 2.7%, in the EU at 3% and at 2% in Italy (2.2%, 2.5% and 2.3% in '25) . “It is falling more rapidly than we had predicted and it is doing so particularly in Italy”, said Gentiloni, pointing out that it is “among the lowest values” and this “is also partly good news for family budgets and for the purchasing power in our country”.
Presenting the winter forecast Gentiloni reported that at the moment with the crisis in the Red Sea “delivery times for shipments between Asia and the EU have increased by 10-15 days and costs have increased by around 400%” , but “at least so far, neither global nor EU supply chains appear to be under strain” and “rising shipping costs are likely to put limited upward pressure on inflation in the EU”

Returning to Italy, the expectation of the community executive is that we will see an acceleration of investments in 2025, as the implementation of the projects supported by the Pnrr accelerates, with a stimulus both in infrastructure spending and in purchase of tangible and intangible assets of companies, which will also benefit from the improvement in financial conditions. The surge in capital spending will therefore translate into stronger growth in imports, and above the slightly improving outlook for exports.

To know more ANSA Rome Agency redoes the accounts, the specter of the corrective maneuver – News – Ansa.it Gentiloni cautious. No additional intervention is necessary for the Mef (ANSA)

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