Italy projected to shift to higher growth potential: Ratings agency

ROME

Italy is on track to a higher level of economic growth compared to pre-pandemic levels, despite the multiple shocks the country has faced in recent years, the ratings firm DBRS Morningstar said on Monday.

In a report, DBRS said Italy’s economic performance after the pandemic has been stronger than the other main members of the eurozone.

This reflected a sound resilience to lockdowns, which were among the strictest and longest among Western countries, energy shocks, and high inflation, it added.

According to projections by the European Commission, the bloc’s executive arm, Italy’s growth potential has improved to about 0.9% from 2022 to 2027, from slightly below zero from 2009 to 2021.

This projection reflects the boost to the economy expected to come from structural reforms the country pledged to introduce in order to get EU recovery funds. Investments financed with these funds will help the Italian economy grow more and reduce unemployment, said DBRS.

Italy is the main beneficiary of the EU recovery money, with around €200 billion ($217 billion) in grants and loans.

The shift to faster growth is also crucial to keep Italy’s public debt, among the highest in the world, on a declining trajectory, after it shot up during the pandemic due to the lockdowns and massive public spending to keep the country afloat.

The International Monetary Fund estimates Italy’s debt as a proportion of gross domestic product to decline to 137% in 2026, from 145% in 2022.