Inflation returns to Italy, GDP at +0.5% (cross-border guide)

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