Italy Raises 2026 Growth Forecast to 1%, Deficit to Breach EU Limit in 2027

Italy raised its 2026 GDP growth forecast to 1% from 0.6% and confirmed this year's budget deficit at 2.9% of GDP, inside the EU's 3% ceiling for the first time since 2019. Economy Minister Giancarlo Giorgetti said the 2027 deficit will rise to 3.4% of GDP from a previous 2.8% target. Rome will invoke the EU's "national escape clause" to request leeway worth 0.6% of GDP in both 2027 and 2028 for defence and energy spending, adding roughly €29 billion ($32.65 billion) in outlays. The 2028 deficit is set at 3.2% of GDP. Public debt is forecast to peak at 138.5% of GDP in 2027 from 138.1% in 2026 — the highest in the euro zone — before declining to 137.9% in 2028, a year later than previously planned. Italy's inflation rose to 4.1% in September.