At FinancialMediaGuide, we note a worrying signal: Italy’s largest business association, Confindustria, has revised down its economic growth forecasts, citing a double blow – the introduction of U.S. trade tariffs and the intensification of global geopolitical tensions. For the eurozone’s third-largest economy, this means recovery will remain limited, with key growth drivers under severe pressure.
According to the new estimates, Italy’s GDP will grow by only 0.5% in 2024 compared to the previous 0.6% forecast. At first glance, the downgrade looks minor, but at FinancialMediaGuide we emphasize that it reflects a deeper structural problem: exports, which have traditionally been the engine of Italy’s economy, are losing momentum. The new 15% U.S. tariffs on European goods, along with escalating political and economic conflicts on the global stage, are pushing Italy’s external trade close to stagnation.
Confindustria explicitly states that exports in 2025 and 2026 will be close to zero growth. We believe this is a critical challenge for Italy, as the country has built its growth model for decades on international trade – from machinery to the fashion industry. At the same time, the strengthening of the euro further undermines the competitiveness of Italian producers abroad.
As we highlight at FinancialMediaGuide, the main sources of growth for Italy will now be investment and a partial revival of domestic consumption. However, this will not be enough to compensate for the loss of export revenues. Moreover, high borrowing costs and a politically unstable environment limit the potential for a significant investment surge.
The government’s official forecast, expected to be published soon, essentially mirrors Confindustria’s calculations – growth of 0.5–0.6% in 2024 and around 0.8% in 2026. We underline that these are extremely low figures for an economy that only recently posted growth of 1% in 2023 and 0.7% in 2024. In effect, Italy is moving toward stagnation.
For investors, the takeaway is clear: in the short term, the Italian market will remain under pressure. At Financial Media Guide, we forecast that without active government intervention and flexible trade diplomacy, Italy risks becoming trapped in a low-growth cycle, where investments merely maintain minimal activity but fail to create a long-term trend.
Our outlook is that over the next two years Italy’s economy will move largely by inertia, and prospects for improvement will arise only if tariff pressure eases and new export opportunities emerge. We recommend that investors closely monitor EU policy toward the United States and the trajectory of the euro, as these will be the decisive factors shaping the future of Italy’s economy.
