New Economic Challenges Loom for Italy Amid Declining Industrial Output
Bank of Italy Reports Deteriorating Business Sentiment as Industrial Production Continues to Contract
MILAN – The economic outlook for Italy is being clouded by growing uncertainties, as highlighted in a recent survey by the Bank of Italy.
The study, focusing on inflation and growth expectations, reveals a worsening sentiment about the nation's economic condition by the end of the fourth quarter of 2024. Notably, the proportion of firms expressing negative views has increased to 30%, up from 21% in the previous survey.
Only 5% of respondents noted any improvement, down slightly from 6%.
This negative outlook spans across all sectors, as reported by Bankitalia.
The survey, conducted from November 20 to December 12, 2024, involved Italian industrial and non-financial services firms with at least 50 employees.
The findings indicate that businesses continue to face challenges, especially in foreign demand and the services sector.
The economic and political uncertainties, fluctuating energy commodity prices, and international trade policies—particularly affecting exporting companies—have contributed to the dim short-term operational outlook.
Despite these challenges, firms anticipate an increase in investment during the first half of 2025. However, they consider the investment conditions to remain unfavorable.
Credit access remains unchanged, with firms maintaining a satisfactory liquidity position.
Additionally, the majority of businesses plan to keep their workforce stable.
Price growth for services and strict industry sectors has stabilized at low levels, while the construction sector sees a slight reduction, albeit maintaining higher levels compared to others.
Over the next 12 months, pricing dynamics are expected to remain stable across sectors, with modest wage increases anticipated.
Firms' expectations for consumer inflation have decreased across all time frames.
In a concurrent development, Italy's National Institute of Statistics (Istat) provides a mixed signal.
Industrial production recorded an annual decrease of 1.5% in November, marking the twenty-second consecutive trend decline, despite a monthly rise of 0.3%.
However, Istat’s monthly economic performance report offers some optimism.
Recent data shows positive signs in the last two months for various Italian economic sectors, even as quarterly averages reflect an ongoing decline.
This is reinforced by the monthly uptick in production, suggesting potential stabilization ahead.
The study, focusing on inflation and growth expectations, reveals a worsening sentiment about the nation's economic condition by the end of the fourth quarter of 2024. Notably, the proportion of firms expressing negative views has increased to 30%, up from 21% in the previous survey.
Only 5% of respondents noted any improvement, down slightly from 6%.
This negative outlook spans across all sectors, as reported by Bankitalia.
The survey, conducted from November 20 to December 12, 2024, involved Italian industrial and non-financial services firms with at least 50 employees.
The findings indicate that businesses continue to face challenges, especially in foreign demand and the services sector.
The economic and political uncertainties, fluctuating energy commodity prices, and international trade policies—particularly affecting exporting companies—have contributed to the dim short-term operational outlook.
Despite these challenges, firms anticipate an increase in investment during the first half of 2025. However, they consider the investment conditions to remain unfavorable.
Credit access remains unchanged, with firms maintaining a satisfactory liquidity position.
Additionally, the majority of businesses plan to keep their workforce stable.
Price growth for services and strict industry sectors has stabilized at low levels, while the construction sector sees a slight reduction, albeit maintaining higher levels compared to others.
Over the next 12 months, pricing dynamics are expected to remain stable across sectors, with modest wage increases anticipated.
Firms' expectations for consumer inflation have decreased across all time frames.
In a concurrent development, Italy's National Institute of Statistics (Istat) provides a mixed signal.
Industrial production recorded an annual decrease of 1.5% in November, marking the twenty-second consecutive trend decline, despite a monthly rise of 0.3%.
However, Istat’s monthly economic performance report offers some optimism.
Recent data shows positive signs in the last two months for various Italian economic sectors, even as quarterly averages reflect an ongoing decline.
This is reinforced by the monthly uptick in production, suggesting potential stabilization ahead.
Translation:
Translated by AI
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