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Modest growth confirms stability as government policies help sustain consumption, investment, and export momentum
Italy’s latest national accounts data for the third quarter of 2025 offer a cautiously encouraging picture: growth remains modest, but it is positive, consistent, and broadly aligned with the expectations set earlier this autumn. According to the final Istat figures, the Italian economy expanded by 0.1% compared with the previous quarter and by 0.6% on an annual basis—an upward revision from the preliminary estimate of 0.4%. While these numbers do not suggest a dramatic economic acceleration, they do underscore a degree of resilience that stands out in a period of global uncertainty.
The government, for its part, has highlighted that stability itself is an achievement in today’s environment. Given the global pressures on energy markets, supply chains, and interest rates, even incremental improvements can signal that the underlying economic foundations are solidifying.
A Confirmation of 2025 Expectations
Importantly, the updated data keep the acquired annual growth for 2025 steady at 0.5%, in line with the projections published in October. This consistency is notable: rather than revising expectations downward, Italy has managed to maintain its outlook thanks to a combination of household spending, robust investment flows, and a positive external balance.
Household consumption—a key indicator of economic confidence—grew by 0.1%. The increase may appear small, but in a context marked by persistent inflationary pressures across Europe, the ability of families to sustain and even incrementally expand their spending suggests that purchasing power measures introduced in recent years, such as targeted tax relief and support for lower-income households, are helping cushion the impact of price increases.
Investment dynamics are even more encouraging. Gross fixed capital formation rose by 0.6% in the quarter, reflecting the ongoing commitment of firms to modernize production processes, upgrade technological infrastructures, and take advantage of fiscal incentives promoting innovation. Policymakers have repeatedly emphasized the importance of strengthening Italy’s productive capacity, and these figures indicate that businesses continue to respond positively.
Exports Drive Growth, Supported by Strategic Policies
Perhaps the strongest signal comes from the external sector: exports surged by 2.6%, outpacing a 1.2% rise in imports. The resulting contribution of net foreign demand accounts for 0.5 percentage points of quarterly growth. This reflects not only the competitiveness of Italian products—especially in machinery, agri-food, and luxury goods—but also the effectiveness of diplomatic and trade initiatives aimed at expanding Italy’s presence in strategic markets.
The government has invested considerable effort in fostering international partnerships and supporting export-oriented firms with credit facilities, simplified procedures, and promotional activities. These initiatives appear to be paying off, helping Italian companies navigate a volatile global environment.
Demand Structure: A Balanced, If Cautious, Picture
Looking at demand components, domestic demand net of inventories contributes 0.2 percentage points to quarterly growth: 0.1 points from private consumption and 0.1 from investment. Public spending remains broadly stable—an intentional strategy designed to maintain fiscal discipline while still supporting essential services and targeted priorities.
The negative contribution from inventory changes (-0.6 points) may reflect cautious stock management by firms in response to global uncertainties. Yet this is offset by the strength of net exports, which ensures a positive overall balance.
Sectoral Developments: Services Lead, Agriculture Rebounds
On the production side, the picture remains mixed but not discouraging. Agriculture stands out with a robust 0.8% expansion—a welcome rebound after several difficult seasons marked by climate-related challenges. Services, the backbone of the Italian economy, grow by 0.2%, driven by tourism, transport, and professional services.
Industry, however, contracts by 0.3%. This decline highlights the need for ongoing modernization and the importance of recent government efforts to expand support for energy-efficient production, digitalization, and advanced manufacturing. Policymakers have framed industrial policy not as a quick fix but as a long-term project, and the continued investment figures suggest that businesses share this forward-looking perspective.
A Step Forward, Not a Plateau
While Italy’s third-quarter results are not spectacular, they confirm stability, gradual improvement, and the effectiveness of policies aimed at sustaining growth in a challenging international context. The government’s emphasis on investment, family support, export promotion, and fiscal responsibility has helped keep the economy on track.
As 2025 continues, Italy’s challenge will be to transform this modest but steady momentum into more robust and widespread growth. The latest data suggest that the foundations are in place—and that cautious optimism remains justified.
Alessandro Fiorentino