Economy rebounds mildly in Q3 2025

Economic growth revised upward: A second release inched Italy's Q3 GDP growth up to 0.1% in calendar- and seasonally adjusted quarter-on-quarter terms—an upgrade from the flat flash estimate—following a 0.1% contraction in Q2. Still, Italy fell short of keeping pace with the euro area, trailing the bloc’s average GDP growth in Q3. On a calendar- and seasonally adjusted year-on-year basis, economic output expanded 0.6% in Q3, following 0.5% growth in the prior quarter.

Net exports spearhead rebound: Compared with the previous quarter, Q3 saw improvements for exports of goods and services (+2.6% in seasonally and calendar-adjusted quarter-on-quarter terms vs -1.7% in Q2) and imports of goods and services (+1.2% vs +0.4% in Q2). In contrast, the reading for fixed investment softened in Q3 (+0.6% vs +1.5% in Q2). Finally, growth in both government consumption and private consumption matched the prior quarter (+0.2% and +0.1%, respectively). The rebound in Q3’s GDP was mainly due to exports bouncing back solidly throughout the quarter: Reduced uncertainty surrounding U.S. tariffs, thanks to the EU-U.S. trade deal in July, likely boosted exports.

Economy to accelerate slightly in Q4 2025: Our panelists expect GDP growth to inch up in sequential terms in Q4, as past ECB interest rate cuts support fixed investment and private spending. That said, exports are expected to contract as the 15% U.S. tariffs on EU products and a strong euro will likely take their toll on the external sector. Looking beyond this year, 2026 GDP growth is forecast to edge above 2025, buttressed by stronger public spending and private consumption growth, the latter driven by below-target inflation and a historically low unemployment rate. Still, Italy’s economic expansion is set to undershoot the past decade's average on the back of softer fixed investment growth.

Panelist insight: Commenting on the outlook, ING’s Paolo Pizzoli stated: “Business confidence data for the fourth quarter also suggests a timid improvement in industry, though risks remain due to the potential impact of US tariffs on Italian exports. For these signals to gain strength, we will likely need to wait until Germany’s ambitious investment projects start to materialise.”

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