Inflation returns to Italy, GDP at +0.5%

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Italian economy with the brake on, inflation returns

The Italian economy with the brakes pulled, inflation is back: GDP at +0.5% and debt towards 139%.

Context

In a nutshell

  • The Italian economy remains on the brakes.
  • In the second quarter of 2026, GDP grew by just 0.2% compared to the previous three months, after +0.3% in the first quarter.
  • For the full year, the Bank of Italy expects an increase of 0.5%, destined to slow to 0.4% in 2027 before rising to 0.9% in 2028.

Key facts

  • What: The Italian economy with the brake pulled.
  • When: Q2 2026.
  • Where: Italy.
  • Who: Bank of Italy.
  • Amount: +0.2% and +0.3%.

The Bank of Italy photograph: the economy continues to grow but without accelerating. They maintain employment, banks and accounts abroad, while the rise in prices and the increase in public debt restrict their room for manoeuvre.

The Italian economy remains on the brakes. In the second quarter of 2026, GDP grew by just 0.2% compared to the previous three months, after +0.3% in the first quarter. For the full year, the Bank of Italy expects an increase of 0.5%, destined to slow to 0.4% in 2027 before rising to 0.9% in 2028. No recession, but growth still too weak to reduce the country's structural fragilities.

The European comparison accentuates the distance. For 2026, the Eurosystem estimates a growth of 0.8% in the euro area, destined to rise to 1.2% in 2027. The European Commission, International Monetary Fund and OECD agree on the forecast of +0.5% for Italy thisyear.

Complicating the picture is

Operational details

The Italian economy remains on the brakes. In the second quarter of 2026, GDP grew by just 0.2% compared to the previous three months, after +0.3% in the first quarter. For the full year, the Bank of Italy expects an increase of 0.5%, destined to slow to 0.4% in 2027 before rising to 0.9% in 2028.

The European comparison accentuates the distance. For 2026, the Eurosystem estimates a growth of 0.8% in the euro area, destined to rise to 1.2% in 2027. The European Commission, International Monetary Fund and OECD agree on the forecast of +0.5% for Italy thisyear.

Complicating the picture is above all the return of inflation. After averaging 1.6% in 2025, the harmonised price index rose to 2.8% in April, 3.2% in May, then to 3% in June and 2.9% in July. Core inflation is lower, at 1.8%.

The Bank of Italy forecasts an average price increase of 3.1% for the whole of 2026, with a return to 2% in 2027 and 1.9% in 2028.

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Key points

The Italian economy remains on the brakes. In the second quarter of 2026, GDP grew by just 0.2% compared to the previous three months, after +0.3% in the first quarter.

For the full year, the Bank of Italy expects an increase of 0.5%, destined to slow to 0.4% in 2027 before rising to 0.9% in 2028.

The European comparison accentuates the distance. For 2026, the Eurosystem estimates a growth of 0.8% in the euro area, destined to rise to 1.2% in 2027.

The European Commission, International Monetary Fund and OECD agree on the forecast of +0.5% for Italy thisyear.

Complicating the picture is above all the return of inflation. After averaging 1.6% in 2025, the harmonised price index rose to 2.8% in April, 3.2% in May, then to 3% in June and 2.9% in July.

Core inflation is lower, at 1.8%.

The Bank of Italy forecasts an average price increase of 3.1% for the whole of 2026, with a return to 2% in 2027 and 1.9% in 2028.

More favorable signals come from work. The Bank of Italy chart shows employment at the highest levels of the series considered and clearly higher than at the beginning of the last decade.

Roughly reading the graph, we go from about 22.5 million employed in 2010 to over 24 million in 2026.

An increase in the order of 7%, obtained by comparing the estimated increase in employees to the initial level.

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Source: varesenews.it

Frequently Asked Questions
How is the Italian economy growing in 2026 according to forecasts?
The Bank of Italy expects GDP growth of 0.5% for the whole of 2026. In the second quarter of 2026, GDP increased by 0.2% compared to the previous quarter, after +0.3% in the first. A slowdown to 0.4% is estimated in 2027, with a recovery to 0.9% in 2028.
What is the forecast for inflation in Italy for 2026 and the coming years?
The Bank of Italy expects an average price increase of 3.1% for the whole of 2026. After averaging 1.6% in 2025, harmonized inflation reached 2.9% in July 2026. A return to 2% in 2027 and 1.9% in 2028 is expected.
Are there positive signs on employment in Italy in 2026?
Yes, employment in Italy shows favourable signs, reaching the highest levels of the historical series considered. An increase of about 7% in employment is estimated from 2010 to 2026, going from about 22.5 million to over 24 million, indicating a positive trend in the labour market.
How is Italian public debt evolving in 2026 and recent years?
Italian public debt is expected to rise, rising from 134.7% of GDP in 2024 to 137.1% in 2025 and estimated at 138.6% in 2026. Despite an improvement in the deficit, which is expected to fall to 2.9% in 2026, debt continues to grow.
What is the situation of commercial relations and the Italian banking system in 2026?
Foreign relations are positive, with a surplus of 6 billion euros in the first five months of 2026 and a balance of assets of 21.7 billion. The banking system is sound, maintaining high levels of capital and liquidity, with non-performing loans well below the peaks of the previous decade.

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