Panorama econòmic

Economic indicators

Italy has a diversified economy, ranking as the third-largest in the Eurozone by GDP. In 2025, GDP grew by 0.5%, with private consumption up 1.1% and construction expanding by 2.4% while manufacturing edged down by 0.3%. The tax burden reached 43.1% of GDP, the highest since 2014. By 2027, RRF-related spending and improved financing conditions are anticipated to boost investment, alongside continued growth in consumption. GDP growth is forecast to reach 0.5% in 2026 and 0.6% in 2027 (data EU Commission).

The country’s primary budget (which excludes interest payments) is structurally positive; however, the interest cost on the government’s debt weighs heavily on Italy’s accounts, with the general government budget being constantly in deficit. In 2025, Italy's general government deficit declined to 3.1% of GDP from 3.4% in 2024. This significant drop was driven by the phase-out of energy price mitigation measures (1% of GDP) and tax credits for housing renovations (around 3.5% of GDP). Despite weak nominal GDP growth, strong tax revenue, particularly from personal income tax and withholding taxes on financial assets, contributed to the reduction. These factors were only partially offset by labour tax cuts, pension indexation to high 2023 inflation, and public sector wage increases linked to contract renewals for 2022-24. The primary balance improved further to a positive 0.8% of GDP, even as debt servicing costs kept interest expenditure high. In 2026, the deficit is projected to decline further to 2.9% of GDP, driven by moderate primary expenditure and stable interest costs. Despite having one of the highest debt-to-GDP ratios globally, Italy has managed to reduce its debt by nearly 20 pp of GDP from its 2020 peak, returning to pre-pandemic levels—a target achieved by a few Eurozone countries. After rising to 137.1% of GDP in 2025, the debt-to-GDP ratio is projected to rise further during 2026-27, reaching 139.2% by the end of the period (data EU Commission). This increase is driven by stock-flow adjustments stemming from the lagged cash impact of tax credits for past housing renovation deficits, compounded by a less favourable interest-growth-rate differential despite positive and rising primary balances. Headline inflation rose to 1.5% in 2025, up from 1% in 2024, with core inflation at 1.9% (official governmental data). A sharp rise in energy prices from March 2026 is expected to lift HICP temporarily, on top of services, where wage pressures will likely persist. Headline inflation is forecast at 3.2% in 2026 and 1.8% in 2027 (EU Commission).

In 2025, employment grew by 1.3%, down from 1.6% in 2024, with further deceleration expected in 2026-27. Rising labour market participation is projected to outpace the decline in the working-age population, pushing the unemployment rate down to 5.7% by 2027 from 6.1% in 2025. Nominal wage growth is expected to moderate to below 3%, as labour demand softens and wage contracts are only partially indexed to past price increases. Italy has high levels of youth unemployment (19% as of Nov. 2023, according to ISTAT), and regional inequalities between the highly industrialised and dynamic North and the poorer, rural southern “Mezzogiorno” areas are still evident. Furthermore, Italy has to face a falling birth rate and a declining population. Italy’s GDP per capita (PPP) was estimated at USD 62,603 by the IMF in 2024, just below the EU-27 average (USD 64,680).

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