Italia Economy

Economic growth:

Italy's GDP growth over the last decade was sluggish, reflecting structural economic weaknesses such as dire demographics, low productivity growth, high public debt, a sclerotic bureaucracy and political uncertainty. The economy contracted sharply during the COVID-19 pandemic, exacerbating pre-existing issues. Recovery in 2021-2023 was supported by EU recovery funds, but long-term growth prospects remain constrained by structural barriers and the lack of deeper economic reforms. To read more about GDP growth in Italy, go to our dedicated page.

Fiscal policy:

Italy's fiscal deficit was in line with the European Commission's 3% target in the years before the pandemic, but has been much larger than that since. The COVID-19 pandemic exacerbated fiscal pressures, leading to increased spending and debt. The government has struggled to control the deficit since, partly due to difficulties in dealing with the unwinding of generous construction subsidies. Find out more on our dedicated page.

Unemployment:

Italy's unemployment rate over the last decade reflected its economic challenges and sluggish growth. The rate was in double digits in the early part of the decade, with only gradual improvements due to structural issues and slow economic recovery. While the unemployment rate fell to an over-decade low in 2022, it remained higher than the European average, indicating ongoing challenges in the Italian job market. For more information on Italy's unemployment click here.

Inflation:

Italy faced generally low inflation rates until the pandemic, often close to or below 0%, as a result of weak domestic demand. That said, the picture has changed notably since the pandemic: Inflation was well above the European Central Bank's 2% target in 2022 and 2023, due to global supply pressures, a strong bounce-back in economic activity, a rise in protectionism and the reduction of Russian gas flows. Go to our Italy inflation page for extra insight.

Monetary Policy:

In Italy, monetary policy is determined by the European Central Bank (ECB). The European Central Bank (ECB) maintained historically low policy rates from 2013 to 2021, reflecting prolonged economic sluggishness and low inflation in the Euro area. By 2022 however, the focus had shifted towards normalizing policy in response to economic recovery and rising inflation, with policy rates hiked to an over decade high. See our Italy monetary policy page for additional details.

Exchange Rate:

Italy is part of the Euro area single currency bloc. The euro saw volatility over the last decade in response to changes in global risk sentiment, and relative interest rates in the U.S. vs Europe. That said, the euro has tended to depreciate vs the dollar, likely on higher safe-haven demand and the United States' economic outperformance relative to the Eurozone. For more info on the euro, click here.

After decelerating in sequential terms in Q2, the economy likely grew at a similar pace in Q3, according to our panelists. Monthly retail sales grew at a slightly faster pace in July–August compared to Q2. Additionally, merchandise exports rebounded in annual terms in July, hinting at a recovery in external demand. That said, industrial output inched down in July–August from Q2, and manufacturing PMI data pointed to sustained weakness in the sector in September. In other news, in mid-October, the cabinet agreed on its budget for 2025. The draft aims to reduce public debt by imposing more taxes on banks and insurers and cutting expenses in public administration. The government also reaffirmed its commitment to cutting the fiscal wedge and boosting aid to low-income households.

Projections out to 2034.

55 indicators covered including both annual and quarterly frequencies.

Consensus Forecasts based on a panel of 51 expert analysts.

Want to get insight on the economic outlook for Italy in the coming years? FocusEconomics collects projections out to 2034 on 55 economic indicators for Italy from a panel of 51 analysts at the leading national, regional and global forecast institutions. These projections are then validated by our in-house team of economists and data analysts, and averaged to provide one Consensus Forecast you can rely on for each indicator. This means you avoid the risk of relying on out of date, biased or outlier forecasts. Our Consensus Forecasts can be visualized in whichever way best suits your needs, including via interactive online dashboards , direct data delivery and executive-style reports which combine analysts' projections with timely written analysis from our in-house team of economists on the latest developments in the Italy economy. To download a sample report on the Italy's economy, click here. To get in touch with our team for more information, fill in the form at the bottom of this page.