Italy GDP Grows More than Expected in Q2

The Italian GDP expanded by 0.2% on the second quarter of 2026, easing from the 0.3% growth in the earlier period and aligned with the preliminary estimate. It marked four consecutive quarters of growth in the Italian economy, despite the economic headwinds in the June quarter as the outbreak of war in the Middle East triggered a global energy shortage and lifted borrowing costs. Private consumption expanded by 0.4% on the quarter, offsetting a 0.1% contraction in government expenditure as Rome attempts to reign in spending to comply with EU fiscal rules. In the meantime, gross fixed investment rose by 0.3% as a 7.4% surge in non-residential development offset a 7% drop in residential construction. Meanwhile, net-foreign demand contributed negatively to the GDP, with a 0.8% jump in exports and a 1.7% rise in imports, weighed by expensive energy purchases from abroad. The Italian GDP was set to grow 0.8% this year should there be no growth for the rest of the year.

The Italian GDP expanded by 0.2% in the second quarter of 2026, ahead of the median consensus of a 0.1% to mark the fourth consecutive period of growth. The result reflected some resilience to adverse macroeconomic developments in the period as the outbreak of war in the Middle East triggered a surge in fuel and natural gas prices, lifting borrowing costs faced by households, businesses, and the government. The expansion was supported by services, offsetting a contraction in both agriculture and industry. On the demand side, domestic consumption offset the negative impact from net foreign demand, with higher energy prices weighing on import turnover. The Italian economy recorded by a carry-over growth rate of 0.8% in H1, firmly above the bank of Italy forecasts of 0.5% for 2026.

The Italian GDP expanded by 0.3% in the first quarter of 2026, maintaining the pace of growth from the earlier period and revised above the 0.2% increase penned in the preliminary estimate, further beating expectations of a 0.1% growth rate. The GDP was carried by a 0.4% expansion in domestic expenditure, with household consumption rising 0.5% while public expenditure stalled. In the meantime, gross fixed investment expanded by 0.7%, as a 2.7% drop in residential development was offset by a 1.3% increase in non-residential investments. Meanwhile, net foreign demand contributed to a 0.9 percentage point increase in the GDP growth figure, as exports grew by 2.2% in the period while imports fell by 0.7%. This offset a 1.1 percentage point drag on the GDP growth figure from negative changes to inventory. From the previous year, the first quarter GDP expanded by 0.8%.