Italy has raised its economic growth forecast for 2026 to 1%, while projecting a higher budget deficit in 2027 as additional fiscal room is used.
The Italian government said the deficit is expected to remain below the European Union’s 3% threshold this year, marking the first time since 2019 that Italy is projected to meet the limit.
For 2027, however, the deficit is expected to rise to about 3.4% of gross domestic product. The government said European fiscal flexibility will allow additional spending, including measures linked to investment and defence.
Italy’s debt-to-GDP ratio is expected to decline only from 2028, underscoring the continued pressure on public finances.
The revised forecasts will form part of the government’s budget planning as Rome seeks to balance higher investment with EU fiscal rules.
