The European Commission has downgraded its growth forecasts for Italy, predicting a modest 0.7% GDP increase for 2024, followed by 1% in 2025 and 1.2% in 2026. This marks a downward revision from earlier projections in May, which had estimated growth at 0.9% for 2024 and 1.1% for 2025. In comparison, Italy’s Ministry of Economy and Finance had set its own growth expectations in its budget plan at 1% for 2024, 1.2% for 2025, and 1.1% for 2026.
When compared to the broader Eurozone, Italy’s outlook appears even more concerning. The region’s GDP is expected to grow by 0.8% in 2024, with stronger growth expected in 2025 (1.3%) and 2026 (1.6%). Notably, Germany, which remains in recession this year, is expected to see gradual recovery in 2025 and 2026, while France is projected to perform better in 2024 with a growth rate of 1.1%.
The Commission’s revised forecasts indicate that Italy’s growth trajectory in 2026 will be the lowest across the European Union, with an anticipated 1.2%, well below the EU average of 1.8%. While Germany is also expected to underperform with 1.3%, Italy’s sluggish recovery places it at the bottom of the EU rankings. Meanwhile, Spain, Greece, and Malta are projected to lead with higher growth rates, particularly in 2024.
According to the Commission, Italy’s GDP growth for 2024 will be primarily driven by investments and a reduction in imports. Economic activity is expected to continue expanding in 2025 and 2026, driven by increased consumption and recovery-related public spending. However, inflation is expected to remain subdued at 1.1% for 2024, rising to 1.9% in 2025 before slightly decreasing again in 2026. Despite this, Italy’s public debt-to-GDP ratio is expected to rise to 139.3% by 2026, primarily due to the delayed fiscal impact of the Superbonus tax credits.
