Introduction to the Italian economic situation
In the third quarter of 2024, Italy showed signs of economic stagnation, with gross domestic product (GDP) remaining unchanged compared to the previous quarter. However, Goldman Sachs analysts, through their Outlook 2025, highlight the surprising resilience of the Italian economy, which is close to the growth levels of France and exceeds those of Germany. This report, written by Filippo Taddei, Senior European Economist, offers a detailed overview of current economic dynamics
and future prospects.
Economic resilience and fiscal policies
Goldman Sachs points out that Italian fiscal policy has adopted a more prudent approach, positioning itself between the two main economies in the Euro Area. This led to a high primary balance in both 2024 and 2025. Although employment growth has been significant, it is important to note that much of this increase was concentrated in the construction sector, boosted by tax credits. The energy crisis has prompted the European Union to provide fiscal support, through the National Recovery and Resilience Plan (PNRR), which has helped to keep Italian investments resilient compared to other
European nations.
Labor market and consumer prospects
The Italian labor market has reached historic levels, with the highest employment rate since 1977 and almost one million more jobs than in 2019. Despite concerns about the impact of US tariffs, forecasts indicate that real disposable income will continue to support consumption, contributing to positive growth in 2025. This macroeconomic scenario offers relatively favorable prospects for Italian sovereign debt, although structural challenges remain for the sustainability of long-term public debt
.
Future challenges and market expectations
Despite the optimistic outlook, Goldman Sachs warns that uncertainties related to real growth in the medium term could negatively affect the sustainability of public debt. Long-term expectations for the Italian economy could return to the center of investor attention only towards the end of 2025. This scenario is further complicated by the recent ISTAT estimate, which confirms zero growth in the Italian economy in the third quarter of 2024, highlighting conflicting trends between the main
components of demand.
Conclusions on the economic outlook
In summary, while Italy faces significant challenges, Goldman Sachs’ forecasts offer a framework of resilience and opportunity. The combination of prudent fiscal policies, a growing labor market and a favorable macroeconomic environment could position Italy for a sustainable recovery in 2025. However, it is crucial to monitor global dynamics and domestic policies to ensure lasting and sustainable growth
.