Italy ranks 10th out of the G20 in GDP at both market prices and PPP rates. Future growth will be constrained by an expected decline in the overall population and the proportion of working age (Taken as aged 16-64) over the next 25 years. This constrains potential GDP growth which we put at 0.5% p.a. over the next 15 years. 2025’s growth rate is likely to be around that potential rate.
Headline and core CPI inflation are already under 2% and there is a good chance that the average rate in 2025 will be below the IMF’s 1.7% forecast.
Italy has low CO2e emissions per head, but the trend is only slowly declining and is not, on recent trends, on track for net zero by 2050.
The government debt level is high but is likely to be stable over the next 5 years at 137% of GDP. Italy has been a deft manipulator of its public finances for many years and will continue to be so. It has sustained what has often appeared to be an unsustainable debt position.
Italy’s external position looks fine, with a small current account surplus and net foreign assets which have increased in recent years.
Outstanding private sector credit has declined relative to GDP since 2020. Money growth is broadly consistent with Italy’s inflation objective and likely real GDP growth.
All of the main governance and competitiveness indicators are a concern, although Italy's perceived corruption score has improved over the last 10 years.