Italy 2024 GDP growth misses target but budget deficit falls #ItalyFinance

ROME (Reuters) – Italy’s economy grew by 0.7% last year, below the government’s official 1% forecast, but the budget deficit fell by more than expected, data showed on Monday.

The 0.7% increase in gross domestic product (GDP) reported by national statistics bureau ISTAT, boosted by four more working days than the year before, marked the same growth rate as in 2023.

This year, the Treasury is targeting growth in the euro zone’s third largest economy at 1.2%, a figure considered unrealistic by virtually all independent bodies.

Most analysts forecast 2025 growth of around 0.7% for a third year running.

Gross domestic product stagnated in both the third and fourth quarters of last year, leaving an extremely weak carryover for growth in 2025.

Rome’s budget deficit came in last year at 3.4% of GDP, a steep decline from 7.2% in 2023 when it was inflated by costly state incentives for energy-saving home renovations, and well inside the government’s 3.8% target.

Prime Minister Giorgia Meloni is targeting the deficit at 3.3% of GDP this year and to fall below the European Union’s 3% limit in 2026.

Despite the fall in the budget deficit, Italy’s public debt – proportionally the second-highest in the euro zone after Greece’s – rose to 135.3% of GDP in 2024 from 134.6% the year before.

The government had targeted 135.8% for 2024 and has pencilled in 136.9% for this year.

The rising debt trend is due to the lasting effect on public accounts of the home renovations scheme, even though it has been largely phased out.

The 2023 debt level was revised down marginally from a previously reported 134.8%.

(Reporting By Gavin Jones)