The European Union’s third-largest economy expanded by 0.7% in 2024, fuelled by domestic consumption and increased exports. The budget deficit sharply dropped compared to the previous year.
Italy’s national output (GDP) grew by 0.7% in 2024, the same as the previous year, according to the country’s statistics office Istat.
The final figure surpassed the Bank of Italy’s forecast of 0.5% GDP growth but missed the Italian government’s expectations for a 1% expansion.
Italy’s modest GDP growth for 2024 compares to France’s 1.1% expansion and Germany’s 0.2% contraction.
The growth was mainly driven by consumption: household spending increased by 0.4% year-on-year and government expenditure jumped by 1.1%.
Net external demand also fuelled growth as exports rose by 0.4%. Imports of goods and services, on the other hand, contracted by 0.7%.
Agriculture, forestry and fishing recorded strong growth (2%), followed by construction (+1.2%) and services (+0.6%). Mining, manufacturing and other industrial activities slightly decreased (-0.1%).
Future growth may depend more on services, as the latest figures from the manufacturing industry suggest continuing contraction.
According to S&P Global’s latest HCOB Italy Manufacturing Purchasing Managers’ Index, a monthly indicator based on data including the number of new orders, output and employment among others, rose from 46.3 in January to 47.4 in February. The reading, below 50, indicates contraction.
This figure showed that the industry has been in decline for nearly a year, although the contraction recorded in February is the most modest seen in five months.
Italian budget deficit fell by more than expected
Rome’s budget deficit showed a sharp decline in 2024, coming in at 3.4% of GDP, compared with a decline of 7.2 % in 2023.
The general government net borrowing was €75.5 billion.
Italy, facing the EU’s excessive deficit proceedings, has a road map to curb its budget deficit to less than 3% of GDP by 2026, bringing it in line with the bloc’s fiscal rules. The government plans to bring the deficit lower to 3.3% of GDP this year.
Despite the fall in the deficit, the Italian public debt rose to 135.3% of GDP, from 134.6% in 2023, according to Istat.
