Italy raises 2026 growth forecast to 1.0%, 2027 deficit to exceed EU limit
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The Italian government published its latest economic and fiscal projections on the 2nd, revising up its forecast for real GDP growth in 2026 to 1.0% from 0.6% in April. According to Economy and Finance Minister Giorgetti, the growth forecast for 2027 was also raised to 0.8% from 0.6%. The government kept its goal of holding the 2026 fiscal deficit to 2.9% of GDP, which would be the first time since 2019 that it falls within the EU's 3% ceiling, but it sharply raised the 2027 target to 3.4% from the previous 2.8%, using the exception provisions of EU fiscal rules to direct spending toward defense and responses to the energy crisis. The public debt-to-GDP ratio is expected to peak at 138.5% in 2027, up from 138.1% in 2026, with the turn to decline coming in 2028, a year later than projected in April. With inflation accelerating on surging fuel prices and borrowing costs also rising, this year's debt ratio is expected to surpass Greece's and become the highest among the 21 euro-area countries.