The good performance ofItalian economy in the first quarter allows us to be more optimistic about year-end results. In the latest report Prometheia he has in fact decided to increase his forecasts of GDP growth for 2024 from 0.7% to 0.8% despite maintaining high attention for the performance of public finances. What convinced the consultancy firm were the estimates preliminaries of Istat for the first quarter which exceeded expectations driven by a further increase in investments in the’building.
“GDP growth in the coming quarters will be affected by the end of the incentive Super bonus to 110%, the negative effect of which will be only partially mitigated by the expense of National Recovery and Resilience Plan (NRRP) – explained Prometeia in its report –. Despite falling inflation and a strong labor market, we expect household consumption to stagnate in 2024, due to the erosion of real financial wealth caused by inflation. Furthermore, losses in purchasing power are only partially offset by recent contract renewals.”
The consultancy firm also recalled that some important measures will expire at the end of the year tax relief on labor income, the renewal of which would cost around 20 billion euros. “Given that the European Commission is likely to implement its excessive deficit procedure (EDP) next June, we expect that any extension of these relief measures will be partial and require additional revenue,” he stresses.
As regards theworld economy, Prometeia for the first quarter of 2024 confirmed the resilience of the main world economies. “As expected, in the first quarter of 2024, the US GDP decelerated on a quarterly basis (0.4%, 0.8% in Q4 2023), but year-on-year growth remained elevated at 3%. Meanwhile, in theeuro area, GDP accelerated more than expected (0.3% q/q, -0.1% in Q4 2023) thanks to improved growth in all major countries. China’s GDP grew 5.3% year-on-year, broadly in line with the fourth quarter of 2023,” he points out.
Prometeia underlines that the main problem remains inflation: in the States UnitedIn fact, inflation did not reduce as expected and in the euro area, although the reduction was in line with expectations, there were large differences between countries. In ChinaInstead, inflation remained around zero, suggesting persistent weakness in domestic demand. “So far, international commodity prices have shown a moderate downward trend in the wake of the expected global deceleration and despite persistent high tensions in Medium Orient and drought in Panama Canalwhich have lengthened some sea routes and consequently increased transport costs,” he notes.
“We confirm one moderate deceleration of global GDP growth in 2024 compared to 2023, resulting mainly from the expected deceleration in emerging economies, including China – concludes Prometeia –. In Europe Current national security conditions require a profound rethinking of defense strategies.”
