Italy GDP Expands 0.5% in 2025

The Italian GDP expanded by 0.5% in real terms in 2025, slowing from the upwardly revised 0.8% growth rate in the previous year and in line with the preliminary estimates from earlier, according to Istat. It was the softest expansion since the Covid pandemic triggered a recession in 2020, and missing the Bank of Italy's latest expectations of a 0.6% increase. The GDP growth was supported by private consumption and gross fixed capital formation, while public expenditure was only marginally higher and changes in inventories contributed negatively to the GDP.

The Italian gross domestic product grew by 0.7% in 2024, the same as the previous year, and indicating an upward revision from earlier aggregates that indicated a growth rate of 0.5%, which were adjusted for four less working days in the year. The result compared to the Bank of Italy’s forecast that the economy would expand by 0.5% but missed the government’s initial forecast of 1% as higher power costs eroded household spending and difficulties in deploying EU pandemic recovery funds delayed public projects. Household consumption rose by 0.4% from the previous year and government expenditure rose by a sharper 1.1%. In the meantime, gross fixed investment advanced by 0.5%, and net external demand had a positive impact on the GDP as exports rose by 0.4% and imports contracted by 0.7%.