Italy’s Economy Outperforms Expectations in Q1, Driven by Domestic Demand

Italy’s economy grew by 0.3% in Q1 2025 compared to the previous quarter, slightly outperforming forecasts thanks to strong domestic demand offsetting weaker trade flows, according to preliminary data from ISTAT.

On a year-on-year basis, GDP rose by 0.6%, surpassing economist expectations of 0.2% quarterly and 0.4% annual growth, as per a Reuters poll. The data was welcomed by Prime Minister Giorgia Meloni’s government, which recently lowered its 2025 full-year growth forecast to 0.6%, down from 1.2%, amid global economic uncertainty and evolving U.S. trade policies.

Economy Minister Giancarlo Giorgetti said Italy had fared "better than other European countries," referencing France and Germany. In comparison, Germany grew by 0.2% in Q1 and France by 0.1%, both in line with forecasts.

While ISTAT did not provide a detailed sectoral breakdown, it reported growth in industry and agriculture, while the services sector remained flat.

The Bank of Italy forecasts 0.5% growth for the year, while the IMF estimates a slightly lower 0.4%. ISTAT also revised Q4 2024 data upward, showing 0.2% quarter-on-quarter and 0.5% year-on-year growth.

The current figures suggest "acquired growth" of 0.4% for 2025—meaning that even with no further growth in the remaining quarters, GDP would still increase by 0.4% this year.

Source: Reuters.com