Italy's Q1 2026 GDP rises modestly as wages slump to record low

Italy's economy recorded a 0.3% growth in the first quarter of 2026, according to ISTAT data. The modest expansion was driven mainly by strong foreign demand, despite a slowdown in industrial production and a slight decline in temporary‑contract employment. The unemployment rate fell to 5%, indicating a relatively resilient labour market, yet inflationary pressures are resurfacing, threatening household purchasing power.

The OECD Employment Outlook 2026 shows that real wages in Italy have dropped 6.1% since 2021, the deepest fall among the major economies. While there was a 1.3% year‑on‑year rise in real wages in the first quarter, the overall trend remains negative, with an employment rate of 62.8%—well below the OECD average of 72.1%—and pronounced regional disparities.