Italy’s industrial output experienced a notable decline of 1.0%, surpassing analysts’ expectations of a 0.3% decrease. This downturn affected nearly all major industrial sectors, except energy, leading to a cumulative drop of 0.9% in output for the August-October period compared to the prior three months. Year-on-year figures also reflected a 0.3% decline, diverging from the anticipated 0.2% increase.
Economist Paolo Pizzoli from ING remarked that this data hampers the potential for industrial growth to positively impact fourth-quarter GDP. However, Prometeia, a think tank, has projected a modest recovery in industrial output from November to January, buoyed by signs of improved business confidence, as indicated by a recent purchasing managers’ survey showing growth in the manufacturing sector for November.
In light of these challenges, the Italian government has downgraded its 2025 economic growth forecast from 0.6% to 0.5%. This adjustment aligns with the government’s goals and follows a minimal GDP growth of 0.1% in the third quarter, coming after a contraction in the second quarter.
The struggles in the manufacturing sector are exemplified by Stellantis, the automotive giant, which reported a drastic 37% decline in vehicle production in Italy for 2024, marking a 68-year low. Car production specifically dropped by 46%, attributed to factors like overcapacity, weak demand particularly for electric vehicles and fierce competition from China. In response to these challenges, Stellantis has committed to a €2 billion investment in Italy for 2025 to restore production.
Overall, Italy’s industrial sector faces substantial hurdles, with output drops and revised economic forecasts. Although signs of potential recovery exist, uncertainties loom, prompting close monitoring by government and industry leaders.
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