Italy Confirms Economic Growth Estimates Despite Tariffs

Italy plans to confirm the current economic growth forecasts for this and next year in its budget proposal, despite the uncertainty brought by U.S. tariffs, Economy Minister Giancarlo Giorgetti stated on Sunday. According to the current forecasts from April, the Italian economy is expected to grow by 0.6 percent this year and by 0.8 percent next year.

– We are confident that we will confirm the GDP growth estimates for those (two) years. We have already taken into account the impact of the trade war and everything it has brought – emphasized the Italian minister at a political gathering in Rome.

At the end of July, business associations had forecasted that U.S. tariffs could reduce Italian GDP by 0.8 percent in 2027.

Deputy Prime Minister and Foreign Minister Antonio Tajani announced on July 28 assistance for domestic companies facing new U.S. tariffs, warning that the strengthening of the euro against the dollar is also causing problems for Italian exporters.

– I am persistently asking the European Central Bank to intervene and lower the cost of money – Tajani said at that time. The government will present updated GDP forecasts and multi-year budget targets to parliament by October 2.

The Italian economy contracted by 0.1 percent in the second quarter compared to the previous three months, mainly due to a deteriorating situation in foreign trade.

In July, industrial production, however, increased by 0.4 percent compared to the previous month, signaling more vibrant activity after a prolonged period of weakness.

The government will not need to further reduce consumption to bring the deficit below three percent of GDP in 2026, Giorgetti asserted. Breaching the European ceiling would reduce its maneuvering space in planning consumption.

The government will reduce the tax burden on middle-income families, the minister promised, without specifying how they intend to finance this move. His party, the League, wants banks to contribute more than one billion euros to the budget in 2026, Reuters sources said at the end of last week.