Italy is expecting its economy to expand by at least 1.2% in 2025, according to a Treasury junior minister. The government is finalizing its medium-term structural budget plan, which will be submitted to the European Commission by September 20. Italian daily Il Sole 24 Ore reported that Rome has set a GDP growth target of 1.3% or 1.4% for 2025, including the impact of planned tax cuts and increased spending. Excluding policy changes, Rome predicts a growth rate of 1.1% for next year.
Economy Ministry Undersecretary Federico Freni stated that a 1.2% estimate for 2025 is acceptable, but they would be happy with a higher figure. The Treasury had previously forecasted GDP growth of 1% for this year and 1.2% for 2025 without any policy changes. The upcoming budget plan will also address Italy’s strained public finances, as the country was put under an Excessive Deficit Procedure by the EU this year. The plan aims to reduce the fiscal gap in accordance with EU regulations.
The EU’s infringement procedure requires Italy to decrease its structural budget deficit by 0.5% to 0.6% of GDP annually. Sources indicate that Prime Minister Giorgia Meloni’s government will commit to reducing the deficit-to-GDP ratio below the EU’s 3% ceiling by 2026. Italy’s deficit-to-GDP ratio may drop below 4% this year from the expected 4.3% estimate, thanks to a positive trend in tax revenues, as reported by Il Sole 24 Ore. The government is focused on complying with the bloc’s fiscal rules and improving its financial stability.
The economic outlook for Italy appears optimistic as the government prepares to submit its medium-term structural budget plan to the European Commission. The target of 1.2% GDP growth for 2025 has been set, with hopes for even higher expansion. Rome’s plans for tax cuts and increased spending are expected to boost overall economic growth. The government is also committed to addressing the country’s public finances and reducing the fiscal deficit in alignment with EU guidelines.
The Treasury’s strategy involves cutting down on the structural budget deficit annually to meet EU requirements. The proposed measures aim to bring Italy’s deficit-to-GDP ratio below the 3% limit by 2026. Positive trends in tax revenues could lead to an improvement in the deficit-to-GDP ratio this year, easing financial pressures. Italy is working towards fiscal stability and compliance with EU regulations to ensure sustainable economic growth and long-term prosperity.
As Italy faces economic challenges and the need for fiscal reform, the government’s budget plan aims to pave the way for sustainable growth in the coming years. The commitment to reducing the deficit and adhering to EU guidelines reflects Italy’s determination to strengthen its financial position. With a focus on boosting GDP growth and improving public finances, Italy is poised to navigate the economic landscape and emerge stronger in the global economy. The government’s strategic approach to budget planning sets the stage for a more stable and prosperous future for Italy.
