Italy’s Economic Outlook for 2025

CERNOBBIO, Italy (Reuters) – Italy sees its economy expanding by at least 1.2% in 2025, as the Treasury junior minister stated in an interview with Reuters. The government is preparing its medium-term structural budget plan, which is due for submission to the European Commission by September 20.

According to the Italian daily Il Sole 24 Ore, Rome intends to set a GDP growth target of 1.3% to 1.4% for 2025, accounting for the expansionary effects of proposed tax cuts and increased spending. Without these policy changes, the expected growth for next year is projected at 1.1%.

“We are fine with a 1.2% estimate for 2025; if it’s higher, we will be pleased,” said Economy Ministry Undersecretary Federico Freni during the TEHA business forum in Cernobbio.

Last April, the Treasury had forecasted a GDP growth of 1% for the current year and 1.2% for 2025 under no-policy-change conditions, with no more ambitious targets set.

The upcoming budget plan will also update the framework regarding Italy’s strained public finances. This year, Italy fell under an Excessive Deficit Procedure by the EU, and the Treasury’s plan, aimed at reducing the fiscal gap in compliance with EU rules, will need to align with the latest reforms of the bloc’s fiscal regulations.

The infringement procedure requires Italy to cap its structural budget deficit, excluding one-off factors and fluctuations from the business cycle, by 0.5% or 0.6% of GDP annually.

Sources informed Reuters that through its medium-term structural budget plan, Prime Minister Giorgia Meloni’s government aims to achieve a deficit-to-GDP ratio below the EU’s 3% ceiling by 2026. Additionally, Il Sole 24 Ore reported that Italy’s deficit-to-GDP ratio this year may drop below 4%, compared to the 4.3% estimate published in April, owing to a favorable trend in tax revenues.