Italy’s principal business lobby increased its growth forecast for the country’s economy this year, due to an improvement in global demand and forecast interest rate cuts by the European Central Bank (ECB).

Indeed, according to Confindustria, GDP in the eurozone’s third largest economy would increase by 0.9% in 2024, a rise from the 0.5% forecast made in October last year, and then accelerate slightly to 1.1% in 2025.

The association went on to add that if Italy can make the most of the European post-pandemic recovery funds, it will also represent a “strong and decisive contribution to growth,” it said in a statement.

Furthermore, the lobby said the available European Union funds to spend on investment and reforms should reach €42 billion in 2024 and €58 billion in 2025, making up approximately 2% of GDP per year, Reuters news agency reports.

Confindustria’s growth predictions are more positive than the majority of domestic and international forecasters.

Indeed, the latest estimates made by the European Commission and Italy's national statistics bureau, ISTAT show 0.7% growth for this year, whilst earlier this week, the International Monetary Fund forecast 0.7% growth for both this year and next.

Confindustria highlighted several factors hindering a more vigorous expansion, including the gradual withdrawal of fiscal incentives for home renovations and the presence of global bottlenecks exacerbated by international tensions.

Moreover, earlier this month the Italian government lowered its own growth forecast for 2024 and 2025. Yet at 1.0% for this year and 1.2% for next year, they remain above market consensus.