Italy: 2026 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Italy

Italy’s economy has continued to grow at a modest pace but faces a more challenging near-term outlook due to the war in the Middle East and heightened global uncertainty. In 2025, economic activity expanded by 0.5 percent, and continued strong fiscal consolidation helped strengthen market confidence, with sovereign spreads reaching multi-year lows. However, persistently high debt and dependence on imported energy are exposing Italy to tighter financial conditions and higher global energy prices, with adverse implications for inflation, real incomes, and confidence. Medium-term growth prospects remain subdued amid weak productivity and adverse demographics.