GDP to rise 1% this year, growth to drop in 2027 and 2028 - Bank of Italy

The Bank of Italy expects Italy’s economy to keep growing over the next three years, but at uneven speeds. Its forecast is for GDP growth of 1% in 2026, followed by slower growth in 2027 and a small recovery in 2028. These figures help show the expected direction of the economy.

The main change is the slowdown after 2026. Growth is projected to fall from 1% to 0.7% in 2027, a decrease of 0.3 percentage points. It is then expected to rise slightly to 0.8% in 2028. The forecasts describe changes in total economic output, not individual household income.

The outlook is uncertain. The Bank of Italy warns that a new spike in crude oil prices could push growth down to zero in 2026. In that adverse scenario, GDP could contract by 0.3% in both 2027 and 2028.

GDP, or gross domestic product, is the total market value of final goods and services produced within a country during a specific period. It is widely used to measure the size and performance of an economy. When GDP grows, economic activity is generally expanding, although GDP alone does not show how evenly benefits are shared.

A 1% rise in GDP means total measured economic output increases by 1% compared with the relevant previous period. For example, if an economy produced goods and services worth 100 units, 1% growth would bring output to about 101 units. The change can reflect stronger production, spending, investment, or exports.

In the article, the Bank of Italy forecasts 1% GDP growth for Italy in 2026. That signals expansion, but it is modest and expected to weaken to 0.7% in 2027. The forecast also depends on uncertain conditions, including energy prices.

The change between the two forecasts is 0.3 percentage points. The Bank of Italy expects GDP growth to be 1% in 2026 and 0.7% in 2027. Subtracting 0.7 from 1 gives a decline of 0.3 percentage points.

Percentage points are the clearest way to compare rates. Saying growth falls by 0.3 percentage points means the growth rate itself moves from 1% to 0.7%. In relative terms, 0.7 is 70% of 1, so the forecast growth rate is 30% lower than the 2026 rate.

This is a slowdown, not a forecast of economic contraction in the central scenario. GDP is still expected to grow in 2027, just more slowly. The outlook becomes much worse in the Bank of Italy’s adverse scenario, where GDP could fall by 0.3% in 2027.

The Bank of Italy revised its 2026 GDP growth forecast upward to 1%. The article explicitly says this figure is higher than the forecast it published in June. However, it does not identify the evidence, economic sector, or event that caused the revision.

That means the reason cannot be established from the provided text. It would be unsafe to attribute the change to consumer spending, exports, government policy, inflation, or any other factor. The article gives the updated number, but not the calculation behind the adjustment.

The Bank of Italy still presents the forecast cautiously. It says there is considerable uncertainty about the outlook. In particular, a new spike in crude oil prices could reduce 2026 growth to zero, showing that the higher central forecast is not guaranteed.

The Bank of Italy warns that Italy’s economic outlook could deteriorate sharply if crude oil prices surge again. In its adverse scenario, GDP growth would fall to zero in 2026. That means the economy would stop expanding rather than achieve the central forecast of 1% growth.

The effects would continue into later years. The Bank says GDP could decline by 0.3% in both 2027 and 2028 if commodity prices and inflation rose particularly sharply. A negative GDP rate means the economy’s total output would be smaller than in the preceding period.

This scenario highlights the economy’s sensitivity to energy costs. Higher commodity prices can raise costs for businesses and households, while higher inflation can weaken spending. The article does not say that this outcome will happen. It presents it as an adverse possibility amid considerable uncertainty.

Oil is a basic input for transport, heating, manufacturing, and many services. When its price rises, companies often face higher operating costs. Some pass those costs to customers through higher prices. This can lift overall inflation, especially when energy affects many parts of the economy.

At the same time, expensive energy reduces purchasing power. Households may spend more on fuel and heating, leaving less for other goods and services. Businesses may delay investment or reduce production because their costs are higher. These responses can slow total economic activity even as prices rise.

The article describes this combination as a risk for Italy. It says particularly sharp increases in commodity prices and inflation could push growth to zero in 2026. Under that adverse scenario, GDP would fall by 0.3% in both 2027 and 2028.

The Bank of Italy is Italy’s central bank, the institution responsible for monitoring important national economic and financial conditions. One of its public roles is to analyse developments and produce economic assessments. Its forecasts give businesses, households, policymakers, and financial institutions a shared view of possible economic trends.

The article shows how this works. The Bank forecasts GDP growth of 1% in 2026, 0.7% in 2027, and 0.8% in 2028. It also tests an adverse scenario involving a new spike in crude oil prices. In that case, growth could reach zero in 2026 and turn negative later.

Forecasts are not guarantees. They are estimates based on available information and assumptions, and the Bank stresses that considerable uncertainty surrounds the outlook. Publishing both a central forecast and a downside scenario helps readers understand the likely path and the risks that could change it.