The Italian economy could grow more than expected in 2026, approaching 1% of GDP.
That is the assessment of Economy Minister Giancarlo Giorgetti, who on the closing day of the Teha Cernobbio Forum said that Italian GDP would exceed the 0.6% growth indicated in the government’s planning documents.
“For now we have secured 0.8%,” the minister explained, adding that if the indicators continue to be favourable, “growth could come close to 1%.”
For Pietro Reichlin, economist and professor at LUISS University, interviewed by Euronews, this is a “realistic estimate”, but still not a result that allows us to speak of a turning point for the Italian economy. Growth remains held back by structural problems, from low productivity to unfavourable demographic trends.
It is not yet a new official government forecast, but the figure is significant because it comes on the eve of the drafting of the 2027 Budget Law and is accompanied by another positive signal for the public finances: rising tax revenues.
More growth, higher tax revenues
In the first seven months of 2026 the state recorded tax revenues of €346.1 billion, €9.4 billion more than in the same period of 2025, an increase of 2.8%, according to the bulletin (source in Italian) from the Finance Department of the Ministry of Economy and Finance (MEF).
“As GDP increases, revenues increase,” the economist explains, a trend “accompanied by positive employment data”. Higher employment and wages mean a broader tax base and therefore, under normal conditions, more income tax.
According to MEF estimates, between January and July 2026 direct taxes amounted to €200.7 billion (+€6.175 billion, or +3.2%) and indirect taxes totalled €145.5 billion (+€3.182 billion, or +2.2%).
Among the various items, personal income tax (Irpef) revenues came to €138.5 billion (+€3.7 billion, or +2.7%). VAT revenues totalled €100.3 billion (+€3.6 billion, or +3.8%).
Excise duties on energy products in the period January–July stood at €12.7 billion (-€1.2 billion, or -8.5%); in July alone they amounted to €2.2 billion, down 3% on July 2025, also as a result of temporary reductions introduced to limit the impact of higher energy prices.
Why Italy is still lagging behind other EU countries
Reichlin warns that “we should not celebrate the growth figure too much“.
Looking at the international picture, he notes that the improvement is “fairly widespread” across the European Union, but that Italy “remains at the tail end, together with Germany and France”.
“Growth, for example in Spain, is higher than ours,” Reichlin says, stressing that the Italian figure is not “so brilliant”, especially if we take into account the support provided by investment financed under the Pnrr.
According to the researcher, at the root of Italy’s backwardness there is a historical factor that dates back to the late 1990s: very low productivity. A feature shared with other peripheral EU countries.
In Reichlin’s view, part of Spain’s stronger growth is also linked to the large inflow of migrants, which has helped drive employment, a phenomenon common in southern European countries and one that also benefits Italy. But, the economist warns, employment growth “is not strong enough to allow us to offset” the problem of low productivity.
“So more work, more workers, but with little added value,” he explains.
Without tackling this underlying issue, the professor argues, we cannot expect a corresponding increase in wages and a rise in prosperity.
What will change in the 2027 Budget Law
The higher revenues recorded in the first seven months of the year cannot automatically be regarded as resources available for next year’s Budget Law.
It will be necessary to determine how much of the increase in revenue is structural and can therefore be used to finance new measures in subsequent years.
If revenues perform better than expected, the economist warns that “we must not harbour illusions” regarding the 2027 budget. “To keep the public accounts in order, exit inflation and keep the deficit under control” or “to increase spending or adopt costly measures” revenues alone are not enough.
According to the professor, it will be a “very cautious budget law, because there is very little room for manoeuvre”.
Besides productivity, growth is also undermined by the fact that “demographic trends are very unfavourable“, he explains.
Italy is experiencing an ageing population and falling birth rates, and “this weighs on the public finances through the pension system, and also on the health service”, causing public spending to rise naturally.
Reichlin concludes by saying that even if Italy managed to reduce the tax burden “especially on labour and businesses, as international organisations advise us”, this would have a positive effect, but one major issue would remain unresolved. These measures would in fact have to be “offset by other sources of revenue, and it is not clear where these could come from”.