Italy showed strength in the latest economic sentiment survey for 2023 by the European Commission, despite an overall fall in sentiment throughout the continent compared to the beginning of last year.

Although economic growth data for European Union member states will not be published for weeks, the sentiment slowdown has revealed a surprise deceleration in the bloc's growth.

Indeed, the European Commission's Economic Sentiment Indicator kicked off 2023 with 97.4 points for the EU overall, but went on to decline every month for the first nine months of the year, before rallying to 95.6 points in Q4.

"Higher interest rates, slower exports, higher energy prices, and other factors have combined to dampen European economic growth prospects and it's not a surprise that economic sentiment has followed suit," said Javier Noriega, chief economist with Milan-based investment bank Hildebrandt and Ferrar to Xinhua news agency.

It was a positive start for Italy within the survey, with the country gaining 2.6 points in December to end the year at 99.3 points. However, this figure falls short of the 102.6 level registered in January 2023.

According to Noriega, the rally in economic sentiment in Italy was down to a sharp slowdown in inflation, which last month stood at 0.6% year-on-year.

Furthermore, within the five largest economies in the bloc, namely Germany, France, Italy, Spain, and the Netherlands, only the latter showed improvement throughout 2023, gaining 0.9 points for the year.

Spain was the only nation to end the year with more than 100 points, with a 2.4-point gain registered in December.

In addition, the European Commission's latest report forecasts the European Union and Eurozone economies would show 0.6% growth for the last year, a fall from previous estimates of 0.8% mid-year growth and 1% growth in Q1.