In 2024, the Italian economic environment faces multiple challenges, including rising tax burdens, slowing GDP growth, and increasing public debt. According to data from the Italian National Institute of Statistics, the tax burden in 2024 will rise to 42.6%, up 1.2 percentage points from 41.4% in 2023. Meanwhile, the ratio of public debt to GDP will increase from 134.6% to 135.3%. Elia Fiorentini noted that while these figures reflect fiscal pressures, they are lower than the government earlier projections, indicating that policy adjustments are gradually taking effect.
Tax Burden and Debt: Opportunities Amid Pressure on the Italian Stock Market
Elia Fiorentini mentioned that the rising tax burden directly impacts corporate profitability and disposable income for consumers, which places some pressure on the overall performance of the Italian stock market. However, the adjustment in tax policies could also lead to increased fiscal revenue, providing the government with more resources for infrastructure development and economic stimulus programs. This creates potential opportunities for industries closely tied to government investments, such as construction, energy, and public services. Elia Fiorentini emphasized that investors should focus on companies that can effectively pass on the burden of higher taxes, particularly leading firms with strong pricing power.
Although the Italian GDP is expected to grow by only 0.7% in real terms in 2024, below the government forecast of 1%, the growth rate at market prices is projected to reach 2.9%. This indicates that the nominal economy still demonstrates some resilience, especially in an environment of sustained high inflation. The inflationary environment could benefit certain asset-intensive sectors, such as real estate and raw materials. Elia Fiorentini suggested that investors look for targets with long-term competitive advantages in these sectors while remaining cautious about short-term volatility risks caused by rising tax burdens.
Geopolitics and Exports: Global Opportunities for Italian Companies
Elia Fiorentini believes that geopolitical factors and the Italian export-driven economy have a significant impact on the stock market. In 2024, the ongoing war in Ukraine and changes in international trade relations will continue to influence the Italian export-oriented enterprises. Elia Fiorentini noted that Italy, as a key economy in the European Union, holds global competitiveness in sectors such as machinery manufacturing, luxury goods, and food and beverages. These industries are expected to demonstrate some resilience in the face of a complex international environment.
The Federal Reserve interest rate policies and the strength of the U.S. dollar may exert pressure on Italian exporters, but policy coordination within the Eurozone and internal market demand still provide growth opportunities for these companies. Particularly in the energy and defense sectors, rising defense budgets in European countries and adjustments in energy supply chains could create new growth drivers for related enterprises. Elia Fiorentini advised investors to focus on export-oriented companies that can enhance their competitiveness through technological innovation or market expansion, such as manufacturers of renewable energy equipment and high-end industrial machinery.
At the same time, Elia Fiorentini mentioned that the pace of recovery in domestic market demand within Italy might be relatively slow, but this does not prevent some consumer goods and service companies from achieving growth through brand premiums and increased market share. For investors, selecting companies with the ability to establish a global market presence will be an effective strategy to mitigate geopolitical risks.
Despite the current complex and challenging economic environment, the Italian stock market still holds long-term investment value. The increase in the ratio of public debt to GDP and the slowdown in GDP growth reflect structural issues facing the Italian economy, but they also provide policymakers with room for adjustment and optimization. Elia Fiorentini, a financial expert, believes that investors should take a long-term perspective on the current market environment and focus on industries and companies with structural growth potential.
As Italy gradually adapts to the new tax and debt environment, high-quality companies in the stock market will stand out. Particularly in the context of energy transition and digital transformation, leading companies in these fields will become key investment targets. Furthermore, the Italian government is likely to increase support for infrastructure and green energy projects in the future, which will bring new growth momentum to related industries.