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Global Economic Outlook – September 2022 Italy: Misty outlook amid mounting headwinds A strong start to the year High inflation, driven by Stretched public finances, additional driven by a recovery in tourism rising energy and food uncertainty regarding gas supplies, turns to fears of a downturn as prices, is squeezing and political volatility pose significant economic conditions deteriorate. household budgets. downside risks to the outlook. The resumption of travel following the relaxation of Table 12: KPMG forecasts for Italy pandemic restrictions has helped support growth in the 2021 2022 2023 Italian economy during the first half of 2022. The overall number of visitors in May this year climbed to 89% of GDP 6.6 3.3 0.3 the levels seen in the same month of 2019, prior to the Inflation 1. 9 8.1 4.9 pandemic (see Chart 36). Meanwhile, GDP growth in the Unemployment rate 9.5 8.2 8.5 second quarter rose to 1.1%, following on from a weaker 0.1% in the first quarter of 2022. Source: Istituto Nazionale di Statistica, Eurostat, KPMG analysis. Note: Average % change on previous calendar year except for unemployment rate, However, surveys point to a deteriorating economic which is average annual rate. Inflation measure used is HICP. environment, signalling a slowdown in growth and a potential downturn on the horizon. In August, purchasing managers’ indices across all three groupings of services, manufacturing and construction were showing readings of less than 50, pointing to a contraction. In addition, overall consumer confidence showed signs of weakness, with the ISTAT consumer confidence index falling to a post-pandemic low of 94.8 in July, before rising only modestly to 98.3 in August. Chart 36: Recovery in Italy’s tourism has helped drive a stronger growth early in 2022 9 120% 1 100% 89% 80% 60% 40% 20% Monthly visitor number as share of same month in 20 0% Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr 2020 2021 2022 Source: Istituto Nazionale di Statistica, KPMG analysis. © 2022 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved. 37

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