CsC raises estimates: GDP +0.9% in 2024, decisive rate cuts and implementation of the Pnrr

The deficit falls

«A reduction in the deficit is expected»: in the CSC forecasts «the net debt of the public administration stands at 4,4% of GDP in 2024 and more 3,9% in 2025, substantially in line with what is indicated by the government in the trend framework of the Economic and Financial Document (4.3% in 2024 and 3.7% in 2025)”. The revenue dynamics are “positive” in the forecasts: “Overall revenues stand at 46.8% of GDP in 2024 and rise to 47.3% in 2025, recording slower nominal growth this year (+0, 7%) and more marked the next one (+4.0%)”.

The “driver” of the rate cut

In the two-year forecast period 2024-2025, in addition to the improvement in global demand which will give new impetus to exports, two factors will be able to further support Italian growth at significant rates. The first is the cut in interest rates by the ECB.

In the latest official statements, it has become clear that the ECB is no longer thinking about further increases and sees the beginning of a phase of cuts. The forecast scenario follows these indications: the first cut in June will be followed by three more by the end of the year, hypothesized by a quarter of a point each, reaching 3.50%, one point less than today; in 2025 three more cuts will follow, up to 2.75%. At these levels, monetary policy will continue to be (slightly) restrictive at the end of the forecast horizon, to a much more limited extent than today. This could give greater impetus to investments and also consumption.

«Pnrr crucial for growth»

The second growth driver in the two-year forecast period is, in the CSC’s analysis, the implementation of the Pnrr which is coming to life: in 2024 and 2025, in fact, the amount of the Plan’s resources to be spent on investments and reforms is equal to at 42 and 58 billion euros respectively, i.e. over 2 points of GDP per year, 100 billion in the two-year period. «Although it is difficult to make precise hypotheses on the overall impacts that the resources of the Pnrr, recently remodulated by the Government – underlines the Viale dell’Astronomia Study Center -, will have on the growth of the economy, because there is a lack of information on various aspects of the remodulation , the boost to GDP from full implementation of the Plan will in any case be very strong, decisive for keeping Italian growth high”.

Energy costs slow growth

There are various factors that will instead tend to slow down Italian GDP over the two-year period. «The first obstacle is that the cost of electricity paid by companies remains higher in Italy than in the main EU countries and also compared to other major international competitors such as the USA and Japan. All this creates a competitive disadvantage for Italian companies: a reform of the electricity market and a greater share of renewables in electricity generation, given that today they have lower costs than fossil fuels, could mitigate energy costs in Italy and reduce (although not eliminate) foreign dependence”.