Italy's economy expected modest growth despite energy and geopolitical pressures

Forecasts suggest Italy's gross domestic product will expand between 0.5% and 0.9% in 2026, with a revised estimate of about 0.6% after the latest ISTAT data. The labour market remains strong, with employment at historic highs and unemployment around 5% (projected 5.4% by the Bank of Italy). Industrial output is rebounding, highlighted by a 23% year‑on‑year rise in auto production, while the manufacturing PMI climbs above the expansion threshold. Export growth of roughly 4% and a solid trade surplus support the outlook, and tourism is set to reach a record 141 million arrivals, boosting the economy.

The Bank of Italy projects GDP growth of 0.5% in 2026, 0.4% in 2027 and 0.9% in 2028, with inflation expected to average 3.1% in 2026, driven mainly by higher energy prices, before easing toward 2% in the following years. Scenarios ranging from severe energy price spikes to faster price normalization illustrate the uncertainty affecting consumption, investment and the current account balance.