Moody’s praises Italia’s resilience: 2026 GDP forecast revised to +0.8 per cent
The Italian economy has proved ‘resilient’ in the face of the energy price shock linked to the conflict in the Middle East
Key points
Moody’s maintains Italia’s Baa2 rating
Moody’s has effectively confirmed Italia’s Baa2 rating . In a statement, the agency reported that it had completed its periodic review of Italia without making any decisions regarding its credit rating. The outlook therefore remains stable.
Italia’s rating is underpinned by a large, diversified and high-income economy, with a strong base of domestic investors who support the financing of government bonds. Italia also benefits from its membership of the European Union and the euro area; these strengths are offset by Italia’s high public debt, says the agency, which limits fiscal flexibility and results in moderate growth prospects.
“Italia’s deficit at 3 per cent in 2026 and 2.9 per cent in 2027”
Moody’s forecasts a public deficit for Italia of 3 per cent of GDP in 2026 and 2.9 per cent in 2027. According to a statement, this represents only a marginal reduction from the 3.1 per cent forecast for 2025, but is in line with the March projections, which estimated a deficit of 2.9 per cent of GDP. The rating agency estimates that the public debt-to-GDP ratio will stabilise at around 138 per cent in the two-year period 2026–2027 and then begin to decline gradually, “thanks to solid primary surpluses and the waning impact of tax credits for building renovations granted in previous years”.
According to Moody’s, Italia continues to benefit from low interest costs, despite the recent rise in government bond yields globally. The impact of this rise will be gradual, given the relatively long average remaining maturity of the bonds, at around seven years. Interest expenditure will rise to 4.2 per cent of GDP in 2026, compared with 3.8 per cent in 2025, before gradually increasing to 4.7 per cent by 2032; this is approximately 0.2 percentage points higher than our previous estimates, as we expect yields to remain higher than their pre-Middle East conflict levels.
“Italia resilient to energy shocks; GDP up 0.8 per cent this year”
The Italian economy has proved ‘resilient’ in the face of the energy price shock linked to the conflict in the Middle East. Following the 0.9 per cent rise in Italian GDP recorded in the first half of the year, Moody’s has revised its growth forecast for 2026 upwards to 0.8 per cent.
