Weekly SmartPills #50

ITALY, SLOVENIA AND LITHUANIA: THE SHIFT IN STANDARD OF LIVING IN EUROPE

Eastern Europe Closing the Gap

According to the latest projections from the International Monetary Fund (IMF), Eastern European countries are on track to surpass Mediterranean nations in terms of standard of living. A Bloomberg chart highlights that Lithuania and Slovenia are expected to overtake Italy by 2029, with Poland not far behind. Nearly four decades after the fall of the Soviet Union, Central and Eastern European nations that joined the EU are steadily catching up with Western Europe's wealth levels. While the convergence has been slower than initially expected, it reflects consistent growth and long-term economic alignment.

Growth Drivers and Regional Shifts

The shift in living standards is driven not only by foreign investment and access to EU markets, but also by Italy’s economic slowdown. The lag in Italy's performance has weakened the broader economic outlook for Mediterranean countries, allowing Eastern European economies to narrow the gap. This divergence illustrates how both internal stagnation and external momentum can reshape regional economic dynamics within the EU.

Italy’s Modest Outlook Amid G7 Peers

According to IMF estimates, the Italian economy is projected to grow by 0.7% in 2024, unchanged from previous forecasts. However, growth is expected to slow even further in 2025, down to 0.7% from a previously forecasted 1.1%. Among G7 countries, Italy ranks at the bottom in terms of growth prospects. While Germany, France, the UK, Canada, and the US are expected to post stronger performances, Italy continues to face structural challenges that hinder its economic momentum. behind.

Conclusion

A new economic geography Italy, Slovenia, and Lithuania now represent a shifting economic map of Europe, where Eastern countries are emerging as leaders in terms of standard of living. This transformation highlights the importance of adapting to global economic dynamics and identifying strategies to maintain competitiveness and sustainable growth.