ROME, May 19 (Xinhua) -- The European Commission on Monday revised down its economic growth forecasts for Italy in its Spring 2025 Economic Forecast, citing global trade uncertainties and shifting U.S. trade policies.
Italy's GDP is now projected to grow by 0.7 percent in 2025 and 0.9 percent in 2026, down from the 1.0 percent and 1.2 percent projected in the Autumn 2024 Forecast.
According to the Commission, Italy's economic expansion will continue to be driven primarily by domestic demand, especially investment linked to spending under the Resilience and Recovery Fund.
Inflation is expected to remain below the 2 percent threshold both this year and next. Meanwhile, the budget deficit is forecast to decline from 3.4 percent of GDP in 2024 to 3.3 percent in 2025, and further to 2.9 percent in 2026.
However, Italy's public debt, the second highest in the EU after Greece, is set to rise from 135.3 percent of GDP in 2024 to 136.7 percent in 2025, and 138.2 percent in 2026. This increase is attributed primarily to the delayed fiscal impact of housing renovation tax credits accrued through 2023.
The downgrade in Italy's outlook is part of a broader adjustment for the EU and Eurozone economies, which are facing headwinds from increased tariffs and the uncertainty surrounding recent abrupt changes in U.S. trade policy. The Commission noted that the unpredictability of the final structure of these tariffs has weighed on economic sentiment and external demand.
