Italy's economy will grow by 0.7% in 2023 and 2024 and hit 1.2% growth in 2025, according to the latest forecast by the Organisation for Economic Cooperation and Development (OECD).

This estimate is in line with the forecast set by the Bank of Italy and Italy's National Institute of Statistics (ISTAT).

Yet, within its latest report, the country's central bank predicts the economy will grow 0.8% in 2024 and 1% in 2025. Last month, ISTAT forecasted the economy's growth rate may slow to 0.6% next year.

Data from the statistics institute reveals Italy's economy failed to grow in three of the past four economic quarters. As per the most recent data, Q3 registered flat growth compared to Q2.

According to the OECD report, the Italian economy was being held back because "low wage growth and high inflation have eroded real incomes, financial conditions have tightened, and most of the exceptional fiscal support related to the energy crisis has been withdrawn, weighing on private consumption and investment."

These factors would only be offset in part by a forecast fall in inflation, targeted tax cuts and a boost to public investment.

The OECD added that private consumption in Italy would edge down from a growth rate of 5% in 2022 to 1.2% this year, 0.7% in 2024 and 1% in 2025.

Furthermore, government consumption will decline from last year's 0.7% figure to respective contractions in 2023, 2024 and 2025 of 0.2%, 0.4% and 0.2%, as the government aims to lower spending to reduce budget deficits.

The OECD's report was published as ISTAT released the findings of its November survey, revealing business confidence fell to 103.4 points from 103.9 in October. Yet consumer confidence rose to 103.6 points in November from last month's 101.6.

In addition, ISTAT said on Wednesday that industrial producer prices in October were 1.5% higher than the previous month, yet still down compared to the year before. This is a gauge of the cost of doing business for Italy's industrial sector.