Italy's fourth quarter GDP stagnated compared to the previous three months, falling short of expectations for slight growth and raising concerns about the economic outlook for the year. This flat growth marked the second consecutive quarter of zero expansion for the Eurozone's third-largest economy.
Despite receiving substantial post-COVID 19 recovery funds from the European Commission, economic activity in Rome has slowed down. Year-on-year, Italy's GDP in the fourth quarter increased by 0.5%, according to the national statistics bureau ISTAT.
Economists had anticipated a 0.1% quarterly rise and a 0.6% annual increase, which were not met. Adjusted for working days, the economy grew by 0.5% in 2024 compared to the previous year.
The official forecast projected a 1% growth in 2024, yet this was not adjusted for working days. ISTAT will provide non-adjusted growth data on March 3, given that there were four more working days in 2024 than in 2023, potentially leading to a higher growth figure.
The weak performance in the latter half of 2024 sets a challenging base for the projected 1.2% growth in the current year. This target appears ambitious, especially in light of the latest data.
Looking ahead, the economic forecast is blurred by geopolitical tensions, potential U.S. trade tariffs, and the challenges faced by the Italian government in utilizing EU recovery funds effectively.
The stagnation in GDP in the fourth quarter was influenced by positive contributions from foreign trade, offset by weak domestic demand, according to ISTAT. The sector breakdown indicated growth in industry while services and agriculture experienced declines.
Before the recent data release, analysts predicted Italy's 2025 growth to fall between 0.7% and 1%. ISTAT also confirmed the third-quarter figures, showing no growth quarter-on-quarter but an increase in year-on-year growth to 0.5% from 0.4%.