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2026 growth forecast

Italy Raises Its 2026 Growth Forecast to 1% and Scales Back Defense Plans

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Italy’s government raised its 2026 growth forecast to 1% from an initial 0.6% estimate, while scaling back planned defense-related fiscal spending. The update, approved by cabinet on 2 October 2026 in the Public Finance Planning Document (DPFP), is a revised outlook—not evidence that Italy has entered a strong-growth phase.

What changed in Italy’s 2026 outlook?

Before cabinet approval, an advance report carried by Investing.com and attributed to Reuters said the government was expected to lift its 2026 forecast from 0.6% to close to 1%, after better-than-expected performance in the first half of the year. That report also said growth was expected to slow in 2027 and remain around the then-current 0.6% forecast. These were reported expectations based on unnamed sources, not figures from an already released government document. Reuters report carried by Investing.com, 2 October 2026.

After the cabinet approved the DPFP on 2 October, ANSA reported Economy Minister Giancarlo Giorgetti’s updated government projections: 1% growth in 2026, 0.8% in 2027, 0.9% in 2028 and 0.8% in 2029. The 1% figure is therefore the government’s October forecast; it is not a recorded growth result. ANSA, 2 October 2026.

Why are defense plans being scaled back?

The change concerns the defense portion of additional fiscal room, not a blanket reduction in every part of Italy’s defense budget. The advance Reuters-based report described a planned reduction in the defense component from 0.9% of GDP to 0.6% of GDP. Those figures were reported ahead of cabinet approval. Investing.com/Reuters.

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In ANSA’s account after approval, the government’s reported plan included a 0.3%-of-GDP deviation for security in 2027 and a similar amount in 2028. It separately described 0.3% of GDP for energy measures in 2027, with a similar figure in 2028. The two accounts use different formulations: the advance report compares defense shares of 0.9% and 0.6%, while ANSA reports annual security and energy deviations. They should not be treated as interchangeable descriptions of one total defense budget. ANSA, DPFP approval report.

Giorgetti said: “Compared to our intentions a few weeks ago, we have decided to scale back the effort regarding defense.” The fiscal flexibility was discussed in the context of the EU mechanism and rising energy costs; it does not establish that all defense appropriations have been cut. ANSA, 2 October 2026.

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How do the government and European Commission forecasts compare?

The European Commission’s Spring 2026 forecast is an earlier projection, not a same-date alternative to the government’s October update. Its May forecast put Italy’s real GDP growth at 0.5% in 2026 and 0.6% in 2027, and public debt at 138.5% and 139.2% of GDP in those years, respectively. The Commission cited the energy price shock as a factor in the outlook and projected 3.2% inflation in 2026. European Commission, Spring 2026 forecast; European Commission, 21 May 2026.

Measure Italian government, October 2026 DPFP reporting European Commission, Spring 2026 forecast
Real GDP growth, 2026 1%, revised from an initial 0.6% estimate (ANSA, 2 October 2026) 0.5% (Commission forecast published in Spring 2026)
Real GDP growth, 2027 0.8% (ANSA, 2 October 2026) 0.6% (Commission forecast published in Spring 2026)
Public debt, 2026 138.1% of GDP (ANSA, 2 October 2026) 138.5% of GDP (Commission forecast published in Spring 2026)
Public debt, 2027 138.6% of GDP (ANSA, 2 October 2026) 139.2% of GDP (Commission forecast published in Spring 2026)

The government projections reported by ANSA put debt lower than the Commission’s earlier forecast in both years shown. That comparison reflects different forecast dates and publishers; it does not by itself show that the debt outcomes have improved.

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What is known about the deficit figures?

ANSA’s reports conflict on the 2027 deficit. Its report on cabinet approval gives 3.4% of GDP, while a separate ANSA article’s headline and opening say 3.5%, then quote Giorgetti giving 3.4%. The approval account says the 2026 deficit will be below 3%; the separate article says 3%. Because the contemporaneous reporting is inconsistent, the 2027 figure should be treated as reported at 3.4% in one account and 3.5% in another unless checked against the primary DPFP document. ANSA approval report; ANSA separate report.

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