## IMF Executive Board Concludes 2025 Article IV Consultation with Italy

_IMF News, July 22, 2025_

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## Bibliographic details
- Published: July 22, 2025

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### Economic performance and recent developments
- Real GDP grew 0.7 percent in 2024, supported by spending under the National Recovery and Resilience Plan (NRRP) and a positive contribution from net exports.
- In the first quarter of 2025, economic activity remained resilient with continued investment growth and a robust labor market.
- Headline inflation gradually increased to just below 2 percent in June 2025.
- Credit dynamics: credit to households has turned positive; the contraction in credit to corporates has eased.
- 2024 public-sector deficit and debt ratios turned out better than projected and enabled a return to a primary surplus.
- Persistent challenges: public debt remains high; productivity growth is weak; the population is rapidly aging; female labor force participation remains well below the EU average; regional disparities endure.

### Outlook and risks
- Growth projections:
  - Growth is projected to moderate to 0.5 percent in 2025.
  - Growth is projected to pick up to 0.8 percent in 2026, supported by increased NRRP-related spending and positive trade spillovers from Germany.
- Inflation projections:
  - Headline inflation is expected to average 1.7 percent in 2025.
  - Headline inflation is expected to converge to the ECB’s 2 percent target in 2026.
- Risks:
  - Upside: global growth acceleration; stronger gains from public investments and reforms.
  - Downside: productivity growth could disappoint (for example, delayed NRRP implementation); escalation of trade tensions; intensification of regional conflicts; tightening global financial conditions and higher financing costs; macro-critical climate-related shocks.

### Fiscal position and policy recommendations
- Recent outcome:
  - 2024 fiscal outturn enabled a return to a primary surplus.
- Directors’ fiscal guidance:
  - Sustained consolidation needed to place public debt on a clear downward path.
  - Authorities’ commitment to a medium‑term fiscal plan that balances debt sustainability and investment needs and aligns with the EU fiscal framework was welcomed.
  - Recommended fiscal measures:
    - Continue to improve tax compliance.
    - Rationalize tax expenditures.
    - Replace inefficient subsidies with productivity‑enhancing measures.
    - Any new spending measures should be compensated with savings elsewhere.
    - Contain pension‑related pressures.
    - Improve cost effectiveness of spending.
    - De‑risk the public sector by reducing outstanding publicly guaranteed loans and strengthen transparency and monitoring of contingent liabilities.

### Structural reforms and growth-enhancing measures
- Priority reforms to durably lift productivity and growth:
  - Full and timely completion of the NRRP remains a priority.
  - Successor reforms should build on NRRP lessons and focus on:
    - Boosting productivity and innovation.
    - Increasing the supply of skilled labor and labor participation.
    - Advancing the transition to renewable energy and resilient energy infrastructure.
  - Improve access to risk capital to revive private sector dynamism.
  - Deepen EU‑level integration to improve access to finance.
  - Ensure industrial policies are well‑targeted to address market failures and coordinated at the EU level.
- Support for green transition and energy security recommendations was broadly endorsed.

### Financial sector and macroprudential stance
- Directors welcomed further improvement in banking sector soundness.
- Macroprudential policies should balance stability requirements with the need to support credit provision.
- Recommendations and cautions:
  - Continue vigilance in monitoring loan quality and sovereign–bank links.
  - Address remaining vulnerabilities among some less significant institutions.
  - Continue efforts to address the 2020 FSAP recommendations and strengthen the AML/CFT framework.

### Executive Board assessment and process
- Executive Directors agreed with the thrust of staff appraisal.
- They welcomed economic resilience, strong policies supporting continued growth, and record‑high employment.
- Directors stressed accelerating reform momentum to strengthen Italy’s growth trajectory as a key priority.
- It is expected that the next Article IV consultation with Italy will be held on the standard 12‑month cycle.

### Key selected indicators (as reported)
- Real Economy (change in percent)
  - Real GDP: 4.8 (2022); 0.7 (2023); 0.5 (2024); 0.8 (2025); 0.6 (2026); (2027 not shown)
  - Final domestic demand: 2.3 (2022); 0.9 (2023)
  - Exports of goods and services: 9.9 (2022); 0.2 (2023); 0.4 (2024); -2.4 (2025)
  - Imports of goods and services: 12.9 (2022); -1.6 (2023); -0.7 (2024); -2.0 (2025)
  - Consumer prices: 8.7 (2022); 5.9 (2023); 1.1 (2024); 1.7 (2025); 2.0 (2026)
  - Unemployment rate (percent) 1/: 8.1 (2022); 7.7 (2023); 6.6 (2024); 6.7 (2025); 6.8 (2026)
- Public Finances
  - General government net lending/borrowing 2/: -8.1 (2022); -7.2 (2023); -3.4 (2024); -3.3 (2025); -2.8 (2026); -2.7 (2027)
  - Structural overall balance (percent of potential GDP): -8.7 (2022); -7.7 (2023); -3.5 (2024); -3.1 (2025); -2.6 (2026); -2.5 (2027)
  - General government gross debt 2/: 138.3 (2022); 134.6 (2023); 135.3 (2024); 136.9 (2025); 138.4 (2026); 138.5 (2027)
- Balance of Payments (percent of GDP)
  - Current account balance: -1.7 (2022); 0.1 (2023); 1.2 (2024)
  - Trade balance: -1.8 (2022); 1.5 (2023); 2.6 (2024); 1.9 (2025); 2.1 (2026)
- Exchange Rate
  - Exchange rate regime: Member of the EMU
  - Nominal effective rate: CPI based (2000=100): 104.6 (2022); 108.2 (2023); 110.0 (2024)

*Source: IMF Executive Board press release — IMF Executive Board Concludes 2025 Article IV Consultation with Italy (July 22, 2025).*

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## References

- [Italy and the IMF](http://www.imf.org/external/country/ITA/index.htm)
- [IMF Policy Advice -- A Factsheet](https://www.imf.org/en/about/factsheets/imf-surveillance)
- [Press Releases](https://www.imf.org/en/news/searchnews)
- [PRESS CENTER](http://presscenter.imf.org/)
- [www.imf.org/en/Countries/ITA](http://www.imf.org/en/Countries/ITA)
- [http://www.IMF.org/external/np/sec/misc/qualifiers.htm](http://www.imf.org/external/np/sec/misc/qualifiers.htm)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2025/07/21/pr-25258-italy-imf-executive-board-concludes-2025-article-iv-consultation_