IMF Staff Country Reports

The 2023 Article IV Consultation highlights that the Italian economy has weathered well the effects of Russia’s war in Ukraine, growing 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. Growth is expected to enter a slower phase and downside risks dominate the outlook. Growth is forecast to moderate to 1.1 percent in 2023 and to 0.9 percent in 2024, and then to pick up temporarily to 1.1 percent in 2025. 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.