The Bank of Italy has published updated projections forecasting Italian gross domestic product growth of 0.9% in 2026, 0.7% in 2027 and 0.8% in 2028. Growth forecasts for the first two years have been raised despite pressure on domestic demand from higher energy prices and financing costs. Consumer price inflation is projected to average 3.2% in 2026 before declining to 2.4% in 2027 and 1.7% in 2028, with the outlook highly dependent on the Middle East conflict and its effects on energy prices.
Compared with June, growth forecasts have increased by 0.4 percentage points for 2026 and 0.3 percentage points for 2027, but fallen by 0.1 percentage points for 2028. The 2026 upgrade mainly reflects a smaller initial impact from the conflict than previously expected, investment linked to the digital and energy transition, and tourism. Government defense and energy spending will support activity over the next two years. Higher inflation is expected to weaken consumption in the second half of 2026 and in 2027, while rising financing costs will markedly slow investment growth in 2028.
Inflation forecasts have been raised by 0.1 percentage points for 2026 and 0.4 percentage points for 2027 because of higher energy prices. Core inflation, excluding food and energy, is expected to remain around 2%, with limited transmission of energy costs to other prices and wages. Under a severe alternative scenario involving sharper commodity price increases, cumulative GDP growth over 2026-2028 would be almost 2 percentage points below the baseline.