Italian firms less gloomy on outlook as inflation eases -central bank survey

MILAN (Reuters) – The opinion of Italian businesses on the prospects for the economy improved in the fourth quarter of 2023 compared with the previous three months, the Bank of Italy said on Monday, as inflation expectations eased sharply.

In the last three months of the year the percentage of businesses that expected better economic conditions rose to 8% from 4% in the previous three months, the central bank said in its quarterly survey.

Those expecting things to get worse decreased to 29% from 37% but uncertainty about the political and economic outlook and the future course of energy prices was still weighing on sentiment, the survey warned.

Expectations improved thanks to both stronger domestic demand and better conditions for investment, it said.

The euro zone’s third-largest economy expanded a meagre 0.1% in the third quarter from the previous three months after contracting by 0.4% between April and June.

National statistics bureau ISTAT said on Nov. 10 that the fourth quarter would also be weak. It will issue a flash estimate of fourth quarter gross domestic product on Jan. 30.

The Bank of Italy’s poll showed businesses expect inflation to stand at 2.3% in 12 months’ time, down from 4.7% in the previous survey.

The survey’s 12-month projection was the lowest since the second half of 2021 and is not far from the European Central Bank’s target of 2% for the euro zone as a whole.

The International Monetary Fund (IMF) and the Organisation for Economic Cooperation and Development (OECD) both see Italian inflation averaging 2.6% this year.

The Bank of Italy survey was conducted between Nov. 22 and Dec. 14 among Italian industry and services companies with at least 50 employees.

(Reporting by Sara Rossi, editing by Gavin Jones)