Italy’s economy will grow by 0.7% in 2026 – forecast

Parliamentary Budget Office notes high geopolitical uncertainty

Italy’s economy will grow by 0.7% in 2026 and 2027, accelerating from 0.5% last year. This is according to estimates by the parliamentary budget oversight body UPB.

In October last year, the UPB estimated GDP growth of 0.4% and 0.8% for 2026 and 2027, respectively.

As noted in the forecast, updated international assumptions point to less unfavorable trends in external demand and lower consumer prices this year. Italy’s macroeconomic outlook remains at risk of deterioration, largely due to the global context, as well as the direction of financial markets and climate change.

The UPB notes that the international environment continues to be characterized by a high level of geopolitical uncertainty, which particularly affects energy prices, trade flows, and financial market expectations. In this context, investors are showing growing interest in safe assets.

The Parliamentary Budget Office believes that global growth remains fragmented. Economic activity in the United States remained relatively stable last year, and Chinese exports remained very high despite global protectionism. In the euro area, production is characterized by moderate growth rates, which vary across countries, with stronger growth in those countries where it is driven by domestic demand.

According to the ECB’s December forecasts, the euro area economy will grow by 1.2% in 2026 and 1.4% in 2027. The forecast for headline inflation for the current year has been revised to 1.9% from 1.7%. In 2027, the regulator forecasts inflation at 1.8%. Consumer prices excluding energy and food (core inflation) will rise by 2.2% this year.