Moody’s: Italia’s economy needs reforms and investment beyond the NRRP

Potential growth rate could reach 1% in 5–10 years

"Due to weak productivity growth and highly unfavourable demographic trends, ongoing structural reforms and the maintenance of higher levels of investment will be necessary even after the conclusion of the National Recovery and Resilience Plan (PNRR) in August 2026, in order to increase Italia’s potential growth rate, which we estimate at 1 per cent per annum over the next five to ten years". This is the view expressed by Moody’s experts in an analysis of Italia’s credit profile, in which they emphasise that they expect structural improvements to become more evident in the coming years. “This progress is underpinned by growth in gross fixed capital formation, driven by the public investment envisaged under the NRRP, and by early signs that this is also encouraging private investment. Furthermore, investment and reforms are gradually reducing the significant disparities between the north and south of the country.” Since 2021 – the analysis concludes – “there have been significant improvements in the labour market and we expect further progress, albeit at a more moderate pace. At the same time, Italia’s performance in the field of innovation has improved and the gap compared with the European Union average has narrowed.”

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