Italy GDP Grows More than Expected

The Italian GDP expanded by 0.2% from the previous quarter in the first quarter of 2026, above expectations of a 0.1% expansion, according to a preliminary estimate conducted by ISTAT. Growth was recorded in net exports, despite the elevated prices of energy that Italy imports during the final month of the quarter, which offset a negative contribution from changes in inventories. The GDP expanded by 0.8% from the previous year. When annualizing the growth rate, the data indicated a 0.5% expansion for 2026. This is a slowdown with the 0.7% from 2025 and aligned with the updated 0.5% projected by the Bank of Italy, but below the 0.8% projections from ISTAT and the EU, of which were made before the outbreak of war in the Middle East pressured the European economy.

The Italian GDP expanded by 0.3% from the previous quarter in the final three months of 2025, confirming the preliminary estimate released earlier and slightly ahead of the initial market expectations of a 0.1% expansion. The economy was supported by gross fixed investment in the period (0.9%), with housing (7.1%) offsetting non-residential capital formation (-1.8%). In the meantime, household consumption (0.1%) and government expenditure (0.2%) were both slightly higher. Net foreign demand contributed negatively to the GDP growth as imports rose by 1% and exports contracted by 1.2%, reflecting the impact of trade disputes with the US started by the tariffs from Washington. The GDP expanded by 0.5% in the full year, slightly below the Bank of Italy's forecast of 0.6%.

The Italian gross domestic product expanded by 0.3% from the previous quarter in the final three months of 2025, according to a preliminary estimate. The growth rate was above market expectations of a softer 0.2% and the 0.1% from the previous quarter, indicating some fresh traction in the Italian economy. Output expanded broadly across all sectors of the economy, with sharper rates seen in agriculture and industry. On the demand front, domestic expenditure was sharply higher, offsetting a negative impact from net foreign demand due to tariff turbulences with the US. On the year, the estimate reflects a 0.7% expansion in 2025, ahead of the Bank of Italy's forecast of a 0.6% rise.