Italy's economic prospects improved in Q4 last year compared to Q3, according to the opinion of Italian businesses.

This is shown by data from the Bank of Italy published on Monday as inflation expectations eased.

Between October and December, the number of businesses that forecast improved economic conditions increased to 8% from 4% in the third quarter, the country's central bank said in its quarterly survey, Reuters reports.

Italian firms predicting the economic situation will worsen fell to 29% from 37%, yet sentiment was still being impacted by uncertainty surrounding the political and economic outlook as well as the future trajectory of energy prices.

Businesses' expectations improved as a result of robust domestic demand and better investment conditions, the bank affirmed.

Italy's economy, the third largest in the eurozone, grew by 0.1% between July and September compared to the second quarter after contracting by 0.4% between April and June.

In November, Italy's national statistics bureau ISTAT said that the fourth quarter of 2023 would also be weak. A flash estimate of Q4 GDP will be published by the bureau on 30 January.

The survey by the Bank of Italy revealed businesses forecast inflation will stand at 2.3% within 12 months, a fall from 4.7% in the prior survey.

In addition, the poll's 12-month forecast was the lowest since the second half of 2021, the Reuters report adds, not too far from the European Central Bank's target of 2% for the entire eurozone.

Furthermore, the International Monetary Fund (IMF) and the Organisation for Economic Cooperation and Development (OECD) both forecast Italy's inflation will average 2.6% in 2024.

The survey by the Bank of Italy was carried out between 22 November and 14 December among industry and services companies in the country with a minimum of 50 employees.