The growth outlook for the global economy remains modest
Following an improvement in the spring, signs of a slowdown in the world economy are emerging, mainly owing to weak manufacturing. In the United States, economic activity remains robust, while in China, domestic demand continues to be affected by the real estate crisis. According to the OECD's September estimates, global GDP growth will stand at just above 3 per cent in 2024 and 2025, in line with last year's figure.
The Federal Reserve lowers its official rates and the People's Bank of China adopts new expansionary measures
In September, the Federal Reserve lowered the target range for the federal funds rate, given the reduction in inflation and the slowdown in the labour market. In Japan, the central bank raised its reference rates at the end of July; the expectation of further increases, in conjunction with disappointing data releases on the US economy, triggered strong financial market tensions in early August, which then broadly subsided. Again in September, the People's Bank of China launched a package of extraordinary expansionary measures.
Euro-area economic activity remains disappointing and disinflation continues
The stagnation in euro-area GDP continued in the summer months: the manufacturing cycle remained weak, while the expansion in services persisted. In September, inflation continued to decrease, as did its core component. According to the ECB staff projections published in September, euro-area consumer price inflation will decrease gradually, from 2.5 per cent in 2024 on average, to 2.2 per cent in 2025 and to 1.9 per cent in 2026.
The ECB lowers its key interest rates again
After a first cut in June, in its September meeting, the Governing Council of the European Central Bank further lowered its deposit facility rate by 25 basis points. In September, the reduction to 15 basis points of the spread between the rate on the main refinancing operations and the deposit facility rate came into force, as decided by the Council last March.
Growth continues at a moderate pace in Italy
Based on our assessments, growth in Italy was moderate over the summer; a new expansion in services was accompanied by the persistent weakness in manufacturing. Aggregate demand benefited above all from the performance of consumption, supported by the recovery in disposable income, against a negative contribution from foreign sales.
The current account surplus increases
In the second quarter of 2024, the current account surplus increased, mainly owing to the reduction in the primary income deficit and to the services balance, which turned positive. Net purchases of Italian securities by non-residents, mainly government bonds, remained high. Italy's positive net international investment position continues to strengthen.
Labour demand weakens and real wages strengthen gradually
Some signs of weakness in labour demand are emerging: job vacancies decreased and the number of hours worked declined in the second quarter. Labour participation fell slightly in the summer, contributing to the decline in the unemployment rate. The recent collective bargaining agreement renewals are spurring a gradual recovery in real wages.
Inflation decreases
After increasing in July, inflation fell again, reflecting the further decline in energy prices. The core component also decreased, although price growth remains relatively high in services, mainly owing to tourism-related items. Households and firms continue to expect moderate price growth.
The cost of lending falls slightly, but demand for loans remains low
Despite credit standards easing slightly in the spring, bank lending to non-financial corporations continued to contract, mainly owing to lower demand for investment loans. In contrast, the decline in lending to households came to a halt, and loans began to increase again for the first time since the beginning of 2023, albeit marginally.
The Government presents Italy's medium-term fiscal-structural plan
On 27 September, the Italian Government approved its medium-term fiscal-structural plan that, for the years 2025-29, includes a net expenditure target in line with the Commission's proposed reference trajectory. The deficit under the policy scenario is expected to drop below 3 per cent of GDP in 2026. The debt-to-GDP ratio is set to continue to increase until 2026, to 137.8 per cent, and then to decrease by an average of 1 percentage point per year until the end of the fiscal consolidation process.
GDP is expected to strengthen gradually and inflation to remain moderate in the next two years
Our projections confirm for 2024 the previous assessments of GDP increasing by 0.6 per cent (0.8 per cent without calendar adjustments) and point to an acceleration in the following two years, when GDP is expected to grow cumulatively by over 2 per cent. Consumer price inflation will remain low, at 1.1 per cent in 2024 and at 1.6 per cent in both 2025 and 2026.
