Recent projections from the Bank of Italy indicate a slightly tempered but generally stable outlook for the Italian economy. According to Eurosystem staff macroeconomic projections, GDP is expected to grow by an annual average of 0.5% in 2026, 0.4% in 2027, and strengthen to 0.9% in 2028. This comes despite an earlier upward revision for Q1 2026 GDP growth, which would have put the 2026 figure at 0.6% if all else remained equal.
These forecasts represent minor adjustments compared to previous estimates. In April 2026, the Bank of Italy had projected GDP growth of 0.5% for 2026 and 0.5% for 2027, with 0.8% for 2028. However, another report from December 2025 had forecasted 0.6% for both 2026 and 2027, and 0.9% for 2028, with a subsequent revision in April 2026 lowering the 2027 forecast from 0.8% to 0.5% due to the impact of the US war on Iran.
Consumer price inflation is projected to be 3.1% on average in 2026, moderating to 2.0% in 2027 and 1.9% in 2028. Inflation excluding volatile components is expected to remain close to 2% over the entire three-year period. Energy prices are anticipated to rise significantly in 2026 before gradually declining, while borrowing costs for firms and households are expected to increase over the forecast horizon. International trade growth is predicted to slow in 2026, then gradually recover.
The projections are subject to considerable uncertainty, particularly concerning commodity prices and geopolitical tensions. Higher and more persistent increases in commodity prices could lead to greater inflationary pressures and significantly curb growth, especially if coupled with financial instability and a weakened global economy. Conversely, a faster decline in commodity prices, stemming from a resolution of conflicts, positive spillover from European defense spending, or accelerated investments in digital and green transitions, could lead to more favorable outcomes.
