Finance
Italy to Confirm 2026 Deficit Around 2.8% of GDP Despite Weaker Growth
Published by Global Banking & Finance Review®
Posted on April 21, 2026
3 min readLast updated: April 21, 2026
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Italy plans to confirm a budget deficit of around 2.8% of GDP for 2026, under the EU’s 3% ceiling, even amid weaker growth due to surging energy costs and Middle East instability. Growth forecasts are revised down to about 0.5% for 2026 and 0.6% for 2027.
Italy Targets 2026 Budget Deficit at 2.8% of GDP Amid Economic Slowdown
Italy's Fiscal Strategy and Economic Outlook
By Giuseppe Fonte
Government's Budget Deficit Goals
ROME, April 21 (Reuters) - Italy aims to bring its budget deficit below the European Union's 3% of GDP ceiling this year despite a weakening growth outlook due surging energy costs and Middle East turmoil, sources close to the matter said.
The government is set to publish its multi-year budget framework (DFP) on Wednesday, containing new forecasts for gross domestic product and public finances.
Revised Growth and Deficit Projections
The document is likely to forecast that under an unchanged policy scenario the euro zone's third largest economy will grow by around 0.5% this year and 0.6% in 2027, the sources said, down from targets of 0.7% and 0.8% set by the government in September.
The budget deficit is seen falling to around 2.8% of GDP this year from 3.1% in 2025, and to around 2.6% in 2027, broadly in line with the targets set last autumn, the sources said.
A spokesperson for the Treasury declined to comment.
Impact of Geopolitical Uncertainty
All estimates, still subject to changes, will be projections under un unchanged policy scenario, rather than official targets, which the government says cannot be made due to the intense geopolitical uncertainty triggered by the U.S.-Israeli war against Iran.
Pressure on ISTAT and Deficit Reporting
PRESSURE ON ISTAT
Upcoming Data Releases and Expectations
Before the cabinet meets, at 0900 GMT EU statistics agency Eurostat and Italy's statistics bureau ISTAT will publish data on the 2025 deficit, with Rome hoping for a downward revision to 3% from the 3.1% that ISTAT estimated in March.
A 3% deficit, as the government had targeted for 2025, would enable Italy to exit an EU disciplinary procedure this year for its "excessive" deficit, provided Brussels is convinced the improvement in its accounts is permanent.
Media Scrutiny and Official Statements
ISTAT has come under pressure this week from pro-government media to revise down its previous estimate, with the bureau's president Francesco Maria Chelli issuing a statement on Monday denying he had called on ISTAT's statisticians to tweak the numbers.
Italian EU Affairs Minister Tommaso Foti said on Tuesday the 2025 deficit may be reported as low as 2.9%.
"I hope that nobody is playing against Italy," he told TV broadcaster La7, without naming ISTAT directly.
(Writing by Gavin Jones, editing by Alvise Armellini)
Key Takeaways
- •Italy aims to reduce its budget deficit to approximately 2.8% of GDP in 2026, below the EU’s 3% limit, enabling a potential exit from the EU’s excessive deficit procedure. (apnews.com)
- •Economic growth forecasts have been downgraded amid energy supply shocks and geopolitical risks—estimated around 0.5% in 2026 and 0.6% in 2027. (whtc.com)
- •Persistent vulnerabilities—including elevated energy prices and structural fiscal challenges—support cautious policy assumptions rather than firm government targets. (lemonde.fr)
References
Frequently Asked Questions about Italy to confirm 2026 deficit around 2.8% of GDP despite weaker growth
1What is Italy's projected budget deficit for 2026?
Italy's projected budget deficit for 2026 is around 2.8% of GDP, according to sources familiar with the government's financial framework.
2How does Italy plan to reduce its deficit below the EU ceiling?
Italy aims to bring its budget deficit below the EU's 3% of GDP ceiling through fiscal measures, despite facing weaker economic growth.
3What factors are affecting Italy's economic growth outlook?
Italy's growth outlook is weakened due to surging energy costs and ongoing geopolitical turmoil, particularly in the Middle East.
4What is ISTAT's role in Italy's budget deficit reporting?
ISTAT is responsible for providing official deficit estimates. The government hopes for a downward revision to support exiting the EU's disciplinary procedure.
