Italy: 2025 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Italy

The 2025 Article IV Consultation highlights that Italy’s economy has continued to expand at a moderate pace. Real gross domestic product (GDP) grew by 0.7 percent in 2024, driven by spending under the National Recovery and Resilience Plan (NRRP) and a positive contribution from net exports. Despite heightened global trade policy uncertainty, economic activity in the first quarter of 2025 remained resilient, supported by ongoing investment growth and a robust labor market. Growth is projected to slow to 0.5 percent in 2025 but is expected to rebound to 0.8 percent in 2026, fueled by increased NRRP-related spending and positive trade spillovers from Germany. A better-than-expected fiscal outturn in 2024 allowed Italy to return to a primary surplus. Sustaining this strong fiscal performance is crucial for placing public debt on a downward trajectory and enhancing economic resilience. Key priorities include raising productivity and boosting the labor supply, particularly by upskilling workers, to counter the effects of population aging.