The International Monetary Fund (IMF) has projected that Italy will record GDP growth of 0.5% in both 2026 and 2027. Moreover, the outlook suggests that economic momentum will remain constrained by external headwinds and structural weaknesses. Therefore, growth is expected to remain modest over the medium term.
“The Italian economy is expected to continue growing at a moderate pace, weighed down by external headwinds and structural challenges.” Additionally, real GDP expanded by 0.5% in 2025, according to the IMF’s Article IV assessment. However, the report indicates that the ongoing impact of global conflict continues to weigh on future growth expectations.
Fiscal consolidation improves, but debt burden persists
Fiscal indicators show a gradual improvement, as the deficit declined to 3.1% of GDP in 2025. Moreover, the IMF noted that fiscal consolidation efforts have continued to progress. However, public debt levels remain elevated and structurally challenging.
Public debt has risen to around 137% of GDP at the end of 2025. Additionally, the IMF warned that debt dynamics remain highly sensitive to shocks in growth, interest rates, and market confidence. Therefore, fiscal vulnerability remains a key medium-term risk for the economy.
High debt levels remain a key structural constraint
The IMF also highlighted that debt pressures continue to limit policy flexibility. Moreover, Italy has recently been projected to overtake Greece as the eurozone’s most indebted economy. Therefore, debt sustainability remains a central concern for policymakers.
However, continued fiscal adjustment and moderate growth are helping stabilise near-term trajectories. Additionally, lower deficits indicate incremental progress in consolidation efforts. As a result, long-term stability will depend on sustained reforms and resilient growth conditions.
