The Italian government's budget deficit also overshot forecasts in 2022, ISTAT reported

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Edited by | Christian Megan
Economic CJ journalist
2, March 2023 - ROME

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  On Wednesday, the Italian National Institute of Statistics (ISTAT) reported that the Italian economy grew less than expected in 2022, by 3.7%. While the Economic growth last year was lower than the 3.9 % initially forecast in December.

A reduction in agricultural output damaged economic growth, ISTAT said, while a recovery in construction and service activities boosted expansion.

Growth slowed significantly over the second half of last year, with rising energy prices and trade systems negatively affected by the conflict between Russia and Ukraine.

The economy contracted slightly in the fourth quarter, and with weak growth in the current quarter, ISTAT said that Italy could be in the midst of a technical recession -- two consecutive quarters of negative gross domestic product (GDP) growth.

Meanwhile, the country's fiscal gap -- the amount by which a government's spending exceeds its revenue from taxes and other sources -- was 8 percent.

ISTAT said the deficit was higher than anticipated due to the way the cost of tax incentives was calculated. Such incentives include those aimed at making buildings more environmentally friendly.

On a more positive note, the agency said Italy's overall public debt as a percentage of its GDP was slightly lower than forecast, at 144.7 percent, down from 149.8 percent in 2021.

Italy remains the second-most indebted country in the European Union when measured by debt-to-GDP ratio, behind only Greece, according to Eurostat.