Italy: 2023 Article IV Consultation—Press Release; Staff Report; and Statement by the Executive Director for Italy

IMF Staff Country Reports, July 26, 2023

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Canonical URL: Italy: 2023 Article IV Consultation—Press Release; Staff Report; and Statement by the Executive Director for Italy

The Italian economy grew by 3.7 percent in 2022.
Private consumption rose robustly on recovery in employment, buoyant tourism, and extensive fiscal support of real purchasing power.
Growth in services and construction offset weakness in manufacturing, especially in energy-intensive industries affected by high-energy prices.
Consumer prices increased, largely on surging energy prices.
Financial conditions tightened considerably and yields on Italian government bonds have risen as monetary policy tightened.

Headline inflation is projected to decline steeply to 5.2 percent in 2023 and to 2.5 percent in 2024, driven by lower energy and food prices.
Recent inflation increases were largely due to surging energy prices.
Monetary tightening has contributed to tighter financial conditions and higher government bond yields.

Growth is expected to enter a slower phase and downside risks dominate the outlook.
Growth forecasts:
- 2023: 1.1 percent
- 2024: 0.9 percent
- 2025: 1.1 percent (temporary pickup)

Energy prices: Major driver of 2022 inflation and a source of sectoral weakness in energy-intensive manufacturing.
Labor and consumption: Recovery in employment supported robust private consumption in 2022.
Public finances and fiscal support: Extensive fiscal support helped protect real purchasing power in 2022.
Financial conditions: Tightening monetary policy led to considerable tightening in financial conditions and higher sovereign yields.

Source: Italy: 2023 Article IV Consultation; Press Release, Staff Report, and Statement by the Executive Director for Italy (July 26, 2023).