Istat: GDP growth of 0.5 % in 2025 and 0.8 % in 2026
The increase in GDP in the two-year forecast period would be supported entirely by domestic demand net of inventories (+1.1 p.p. the contribution to growth in both years), while net foreign demand would make a negative contribution (-0.6 and -0.2 p.p.).
Key points
The Italian GDP is expected to grow by 0.5 per cent in 2025 and 0.8 per cent in 2026, after having increased by 0.7 per cent in 2024. Istat writes this in its dossier on the outlook for the Italian economy. The increase in GDP in the two-year forecast period would be sustained entirely by domestic demand net of inventories (+1.1 percentage points contribution to growth in both years), while net foreign demand would provide a negative contribution (-0.6 and -0.2 p.p.). The forecast scenario for foreign demand assumes an easing of uncertainty regarding the direction of US trade policy and a stabilisation of international demand, accompanied by a continuation of moderation in energy commodity prices.
Inflation is expected to slow
After the decline in prices during 2025, a further slowdown in inflationary dynamics is expected in 2026, boosted by falling energy prices and a stabilisation of demand growth at moderate rates. The dynamics of the deflator of resident household expenditure in 2025 would be in line with these trends (+1.7%), with a further decline in 2026 (+1.4%).
Consumption growth but at a moderate pace
Growth in private consumption is expected to increase, albeit at a moderate pace (+0.8% and +0.9% in 2025 and 2026) as a result of wage and employment growth and, in 2026, a reduction in the propensity to save and the deflator of resident household expenditure. The increase in investment, which accelerated strongly in 2025 (+2.8%, up from +0.5% in 2024), would also continue with some dynamism in 2026 (+2.7%), boosted by the completion of the works planned in the NRP.
Real salaries in September 8.8 points lower than in January 2021
Monetary wages are growing faster than prices this year, with a +2.9 per cent increase in per capita wages expected by the end of the year, but there is still a gap to close compared to post-pandemic inflation. Overall, 'contractual wages in real terms in September 2025 are 8.8% below the levels recorded in January 2021'(
Employment accelerates more than GDP
Employment, measured in terms of labour units (AWU), would grow faster than GDP (+1.3% in 2025 and +0.9% in 2026) accompanied by a further decline in the unemployment rate (6.2% in 2025 and 6.1% in 2026).
