Italy's economy shows modest growth amid uncertain outlook

Italy GDP forecast private‑sector job growth industrial turnover rise Iran war price impact OECD G20 Italy data

EY forecasts indicate Italy’s real GDP will expand by 0.6% in 2026 and 0.7% in 2027, with inflation easing to 2.6% and 2.1% respectively and unemployment held at 5.6%. The fiscal deficit is projected at 3.2% of GDP in 2026, with public debt falling slightly to 136.2% of GDP by 2027.

OECD preliminary data for Q1 2026 show Italy’s GDP grew 0.3% quarter‑on‑quarter and 0.8% year‑on‑year, matching the previous quarter’s pace. The broader G20 economy remained stable at 0.7% growth.

Labor market figures released by INPS reveal a positive net increase of 340,000 private‑sector jobs in March 2026, driven largely by a rise in permanent contracts. Employers created 1.9 million new contracts in the first quarter, with seasonal, intermittent and temporary hires offsetting a decline in permanent positions.

Codacons highlighted that industrial turnover in April rose 3.2% in value while volumes fell 0.6%, attributing the price surge to the war in Iran and its impact on Iranian‑linked supply chains.

A recent government report notes Italy’s economy grew 0.8% in the first quarter of 2024, with improvements in manufacturing, exports and public‑sector investment, though challenges persist in youth unemployment and regional disparities.