Italy grows more than expected in second quarter, 2026 outlook improves
Italian Economic Performance and Outlook
Second Quarter Growth Exceeds Expectations
ROME, July 30 (Reuters) - The Italian economy grew by 0.2% in the second quarter from the previous three months, preliminary data showed on Thursday, a slightly stronger reading than expected that supports the outlook for this year.
On a year-on-year basis, gross domestic product in the euro zone's third largest economy was up 1.0% between April and June, national statistics bureau ISTAT said, more significantly above expectations.
Forecasts and Market Expectations
A Reuters survey of 26 economists had forecast a 0.1% rise quarter-on-quarter and a 0.7% increase year-on-year.
Factors Supporting Growth
The data suggests that the Italian economy is holding up better than expected in the face of the surge in energy costs linked with the conflict in Iran.
Breakdown of Economic Components
Domestic Demand and Trade Flows
The quarter-on-quarter growth between April and June was the result of a positive contribution from domestic demand which more than offset a drag on growth from trade flows, ISTAT said.
Sector Performance
It gave no numerical breakdown of components with its preliminary estimate, but said services expanded, while both industry and agriculture contracted.
Growth Projections and Government Forecasts
Acquired Growth and Year-End Outlook
So-called "acquired growth" stood at 0.8% at the end of the second quarter, up from 0.6% after Q1.
Implications for Full-Year Growth
This means that even if GDP is flat in each of the remaining two quarters of 2026, full-year growth will be up 0.8% from 2025, beating Rome's official full-year forecast of 0.6%.
Government Growth Targets
Giorgia Meloni's government in April cut its growth outlook to 0.6% for this year and next, reflecting soaring energy prices and turmoil in the Middle East, from previous targets of 0.7% and 0.8% respectively.
Historical and Future Growth Rates
In 2025 Italy grew by 0.5%.
The government forecast a 0.8% growth rate for 2028, which would mark six consecutive years of sub-1% growth.
(Reporting by Antonella Cinelli, graphic by Stefano Bernabei, editing by Gavin Jones)
