The recent economic prospects outlined by the OECD, the Organization for Economic Co-operation and Development, outline a complex overview of what is the Italian situationwhose future presents a number of challenges and opportunities.
In fact, if on the one hand signs of optimism are emerging at a global level, with an expected growth in global GDP of around 3.1% in 2024 and 3.2% in 2025, on the other hand Italy continues to navigate in troubled waters .
The prospects for Italy
The OECD outlook for Italy remains cautious, with a GDP growth expected of 0.7% in 2024 and a modest increase to +1.2% in 2025.
This picture is influenced by several factors, including still weak domestic economic activity and the persistent inflationary pressure of the last two years, which has negatively affected the real incomes of Italian citizens.
The effects of the stop to the Superbonus
One of the critical elements that emerge from the OECD’s analyzes is the stop to the Superbonus, which, despite having become unsustainable for public finances, could have an significant impact on the contraction of investments in the real estate sector. However, the increase in public spending envisaged by the National Recovery and Resilience Plan (Pnrr) and the temporary tax cuts are seen as elements that partially mitigate the effects of this reduction in fiscal support.
The OECD recommendations for Italy
The OECD recommendations for Italy are clear: they are necessary structural reforms in key sectors such as competition, civil justice and public administration, as well as a increase in public investments provided for by the Pnrr. These actions are considered indispensable to stimulate more robust economic growth in the long term.
Despite the encouraging forecasts regarding inflation and the unemployment rate, with both decreasing, the OECD highlights the need for particular attention to Italian public finances. The debt/GDP ratio is destined to grow further in the coming years, while the deficit will remain above the 3% threshold established by the European Union.
For this reason, to face these challengesthe OECD suggests a fiscal adjustment that goes beyond superficial interventions, including concrete actions against tax evasion and a rigorous review of public spending, in particular regarding pensions. Only through a serious and strategic commitment to structural reforms and prudent management of public finances will Italy be able to guarantee more solid and sustainable economic growth in the medium to long term.
Possible consequences and risks
If effective measures are not taken to stimulate economic growth, Italy could continue to stagnate or record very modest growth in the next future.
This could result in a increase in unemploymentone reduction in real incomes and a decrease in investments, with consequent negative effects on the general well-being of the population.
Furthermore, if the debt-to-GDP ratio continues to increase, they could occur public debt sustainability problems. An increase in debt could put pressure on financial markets and increase financing costs for the Italian government, thus reducing investment capacity and fiscal flexibility. Consequently, a deterioration in economic conditions could also increase the risk of financial instability in the country, with potential negative consequences for the banking system and for foreign investments in Italy.
If Italy fails to meet budget targets and implement significant structural reforms, it could lose credibility in international markets and among foreign investors. This could make it more difficult to obtain financing on favorable terms and could damage the country’s reputation as a reliable investment destination. And this, even considering that our country is unable to keep pace with the economic growth of its European and global partners, it could get worse in the long run unemployment, the earning power of individuals and families and, in general, the quality of life of Italian citizens.
