The preliminary estimate of Italian economic growth in the first quarter was a positive surprise, with real GDP rebounding by 0.5% q/q. However, we anticipate a slowdown in activity in Q2, before a contraction in Q3. At 0.9% in 2023, Italian GDP growth would still be above that of the eurozone as a whole. Nevertheless, record flooding in the north of the country is likely to have significant economic repercussions, particularly in the agriculture and tourism sector. It is difficult to assess them at this stage.
Although slightly down in April, consumer confidence remains close to its long-term average. The positive development lies in households’ unemployment expectations at one year, which fell significantly in April, reaching their lowest level since October 2018. The unemployment rate has decreased gradually since the end of the second lockdown in spring 2021, falling to 7.8% in March 2023. Employment (23,349,110) and the employment rate (60.8%) reached new records.
Inflation in Italy remains among the highest in Europe. The main reason for this was that energy costs for consumers continued to rise sharply (gas and electricity prices rose by 20.1% and 19.5% year-on-year in April, respectively). However, core inflation (excluding energy, food, alcohol and tobacco) rose 5.3% year-on-year in April: this is below the eurozone average, which stood at 5.6%. Wages growth in Italy is steadily increasing against a backdrop of a decline in the unemployment rate. The basic hourly wage thus increased by 2.3% year-on-year in March according to Istat. However, this level is still significantly below the inflation rate.
Guillaume Derrien (article completed on 24/05/2023)
