Employment growth slows in Italy and inflation accelerates

Employment (in terms of labor units) would mark, in 2026, a slowdown in growth — at +0.9%, after +1.2% in 2025 — accompanied by a further drop in the unemployment rate to 6% from 6.1% last year. In 2027, an even more contained expansion of employment is forecast (+0.5%), along with a further decline in the unemployment rate, to 5.9%. This is what Istat notes in its report on the trends and outlook of the Italian economy. GDP In 2026 and 2027, Italian GDP is forecast to grow by 0.9% and 0.6% respectively, after +0.6% in 2025. According to Istat, economic growth would be supported by domestic demand excluding inventories (a contribution of +1.2 percentage points in 2026 and +0.6 in 2027). Net foreign demand would instead provide a neutral contribution in 2026 and a slightly positive one in 2027. The rising trend in raw material prices should fuel an acceleration of inflation: the change in the deflator of household spending would stand at +3.3% in 2026 before falling to +2.8% in 2027. The statistics institute observes that in the 2026-2027 two-year period, consumption by households and private social institutions is expected to expand, but with a progressive deceleration: +1.0% and +0.6% respectively, compared with the +1.2% recorded last year. According to Istat, rising prices will curb consumption, against a positive but substantially stable dynamic of nominal gross per capita wages. As for the business sector, the most recent supply-side data continue to show signs of weakness in the sector, and gross fixed investments would also show a slowing dynamic (+2.9% in 2026 and +1.0% in 2027, from +3.9% in 2025), caused mainly by the scaling back, under current regulations, of public stimulus. Istat therefore explains more generally that over the forecast two-year period, the Italian economy would continue to benefit from the resilience of domestic demand, albeit slowing compared with 2025. Household consumption, despite the pressures from rising prices on the dynamics of real wages, would be supported by the use of savings and the favorable performance of the labor market. Investments would continue to benefit, albeit to a progressively lesser extent, from interventions still being completed under the PNRR, while however being affected by the high uncertainty of the geopolitical scenario and rising energy costs. Exports and imports would instead continue to be supported by the positive dynamic of international trade. Industrial production In September 2026, a cyclical recovery in seasonally adjusted industrial production is recorded after the drop registered in August. Istat estimates that the index rose by 1.2% compared with August. Averaged over the third quarter, the level of production fell by 0.4% compared with the previous three months. The seasonally adjusted monthly index shows cyclical increases for capital goods (+1.3%) and intermediate goods (+1.2%); negative changes, however, are recorded for consumer goods (-0.2%) and energy (-1.4%). Net of calendar effects, in September the general index fell by 0.1% in year-on-year terms (calendar working days numbered 22, as in September 2025). The decline is wider for consumer goods and intermediate goods, while growth is observed for capital goods and, above all, for energy. Toward a slight drop in oil Growth in the euro area should show substantial stability both this year and next, also thanks to an easing of geopolitical tensions and the consequent slight drop in oil, but "the risks to the baseline scenario remain tilted to the downside." This is forecast by Istat in its report on the trends and outlook of the Italian economy in 2026-2027. Istat recalls that in 2026 the trend in the energy sector was marked by high volatility and a widespread upward tendency, with Brent quotations rising above the $100-per-barrel threshold. In parallel, the natural gas market showed strong swings linked to supply uncertainty and logistics cost increases. For 2027, on the assumption of an easing of geopolitical tensions in the Middle East and a progressive restoration of normal trade routes through the Strait of Hormuz, a moderate decline in the Brent price over the course of the year is forecast (to $96.1 per barrel, from $97.8 in 2026), while natural gas quotations in Europe would remain at high levels (€60.9 per MWh, from €58.8 in 2026) due to a combination of structural supply constraints, storage dynamics and logistics bottlenecks. Overall, growth forecasts for the area show substantial stability for this year and next (+1.1% and +1.2% respectively, after +1.2% in 2025). In 2027, economic activity growth should slow both in Germany (from 1.3% to 1.1%) and in Spain (from 2.5% to 1.5%), while in France a moderate acceleration is forecast (from 0.4% to 0.7%). The risks to the baseline scenario nevertheless remain tilted to the downside. The persistence of geopolitical tensions could reignite inflationary pressures. In parallel, a scaling back of expectations for productivity growth and profitability linked to the use of artificial intelligence risks triggering sharp corrections on the stock market, with consequences for the real economy. Reproduction reserved © Copyright ANSA