(Bloomberg) -- Italy faces economic uncertainty in the first part of 2024 with trade and exports at risk and industrial activity weak, the country’s main business association said, while adding that subdued inflation is a positive. 

The year “started with a sharp reduction in shipping in the Suez Canal area” Confindustria wrote in a report published on Saturday, a nod to maritime tensions in the Red Sea that have seen many vessels rerouted on the crucial trade route.

It added that industrial production and business confidence were already falling in late 2023, and the Red Sea situation and resultant supply-chain snarls may make the scenario worse. 

Read more: Italy Plans to Sell €2 Billion Eni Stake to Reduce Debt 

On the other hand, Italy’s inflation was still low in December while the services sector has been recovering, according to the business lobby.

Earlier this month Prime Minister Giorgia Meloni said she saw scope for Italy’s economy to grow faster than the European Union average this year. 

Still, the Bank of Italy has cut its growth forecast for the euro area’s third-biggest economy due to tighter monetary and credit conditions for families and companies. Gross domestic product is expected to rise just 0.6% in 2024, according to the central bank. 

Meloni has been grappling with low growth that’s making it harder for her to reduce Italy’s mammoth debt burden of about 140% of output. Earlier this week, Bloomberg News reported that Italy’s government is planning the sale of up to 4% of Eni SpA after the oil company completes a buy-back plan, a deal which would allow Rome to reduce its debt. 

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