Italy’s gross domestic product (GDP) growth is projected to moderate over the next few years, with disinflation continuing, according to the International Monetary Fund (IMF), which recently concluded discussions for its 2024 Article IV Consultation with the country.

The country’s GDP is projected to rise by 0.7 per cent this year as well as the next, the IMF said in a statement following the mission.

A subsequent temporary growth slowdown could be expected in 2026 and 2027.

Thereafter, growth is expected to return to potential, which would increasingly reflect the shrinking national working-age population unless offset by rising productivity underpinned by effective structural reforms and investments, higher labour force participation and continued absorption of foreign workers, the IMF noted.

Headline inflation is projected to fall to an average of 1.7 per cent in 2024 and return to the 2-per cent target in 2025.

While wage growth is forecast to pick up this year and next, firms are expected to absorb the increase mainly from their expanded profits, thereby keeping core inflation on a moderating path, it said.

Reinvigorating productivity is urgently needed. Led by the drop in energy prices, rapid and orderly disinflation is well advanced and the current account has returned to surplus from a large, but temporary, deficit, the IMF added.

Fibre2Fashion News Desk (DS)

Italy's GDP growth projected to moderate over next few years: IMF

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