Key facts
- Confindustria forecasts Italy's economy to grow by 1% in 2026.
- Confindustria hiked its 2026 growth forecast from 0.5% made in March.
- Confindustria warned of a slowdown in 2027 due to the end of EU post-COVID-19 funds, rising oil prices, and higher inflation and interest rates.
- Confindustria forecast Italy's 2026 average inflation rate at 3.2%, up from 2.5%.
- Confindustria forecast inflation to ease to 2.2% in 2027.
- Confindustria forecast the 2026 budget deficit-to-GDP ratio at 2.9%.
Italy's economy is projected to grow by 1% in 2026, according to a forecast by the country's main business lobby, Confindustria. This represents an increase from its previous estimate of 0.5% made in March. The improved outlook for 2026 is largely attributed to European Union post-COVID-19 funds (PNRR), which have stimulated investments and supported stronger-than-expected growth in the first two quarters.
However, Confindustria warned that a renewed slowdown is anticipated in 2027. This is expected to be driven by the conclusion of the PNRR funding, a recent rise in global oil prices, and increased inflation and interest rates. The lobby noted that turmoil in the Middle East has so far had a less significant impact on global oil prices than feared, and the pass-through of energy costs to other goods and services in Italy has been weaker than anticipated. Despite this, quarterly growth in the latter half of 2026 is expected to be weak.
Confindustria's 2026 growth forecast of 1% aligns with that of Prime Minister Giorgia Meloni's government. For 2027, the government forecasts growth at 0.8%. Confindustria also projected Italy's 2026 budget deficit-to-gross domestic product ratio at 2.9%, in line with government expectations. The lobby significantly raised its forecast for Italy's average inflation rate in 2026 to 3.2% from 2.5%, expecting it to ease to 2.2% in 2027.