Latest Thoughts On the Italian Economy

Forecasts are for subdued GDP growth in 2025. The IMF, OECD and Italy's national statistics agency have forecasts of 0.8%, 0.9% and 0.8%, respectively after growth of around 0.5% expected for 2024. The weakness reflects a slowdown in investment spending and a struggling German economy, the largest export market for Italy’s manufacturing sector. Even so, the current account is in surplus and Italy has (modest) net foreign assets.

Government debt is high as a share of GDP and is expected to rise (albeit slowly) in the coming years, but not in an uncontrolled manner.

Politically, Georgia Meloni, the prime minister claims a very solid relationship with President Trump and Elon Musk. In that respect, she may well have a pivotal role to play in 2025 as the world seeks to come to grips with Trump.