The International Monetary Fund (IMF) recently concluded its 2025 Article IV Consultation with Italy. An IMF mission, led by Lone Christiansen and including Thomas Elkjaer, Gee Hee Hong, Yueling Huang, Alain Kabundi, and Sylwia Nowak, conducted discussions in Italy from May 14 to 28. The mission's findings have been summarized in a concluding statement.
The Italian economy showed moderate growth with economic activity increasing by 0.7% in 2024. This growth was partly driven by infrastructure investment under the National Recovery and Resilience Plan (NRRP) and net exports. Despite global trade uncertainties, real GDP grew by 0.3% quarter-on-quarter in early 2025, while employment hit a record high. However, challenges such as low female labor force participation and regional disparities persist.
The IMF highlighted concerns about Italy's subdued productivity growth and aging population affecting future growth prospects. The April 2025 World Economic Outlook forecasted growth to slow to 0.4% in 2025 before rebounding slightly next year due to NRRP investments and positive trade effects from Germany's investments.
The IMF emphasized maintaining strong fiscal discipline along with reforms to reduce public debt ratios and bolster resilience. A primary surplus of 3% of GDP is recommended by 2027 to address vulnerabilities associated with public debt. Measures like reforming tax compliance, rationalizing tax expenditures, and eliminating preferential tax rates for self-employment were suggested to strengthen fiscal performance without adversely affecting economic activity.
In terms of financial sector policy, the IMF stressed the importance of safeguarding financial soundness through vigilance over bank asset quality and capital positions amid potential risks from trade tensions and climate-related shocks.
On structural policies, the IMF called for comprehensive reforms to boost productivity and growth potential. It emphasized leveraging lessons from NRRP implementation for future reforms focusing on human capital development, expanding labor supply, enhancing innovation capacity, improving access to finance for firms, and ensuring policy predictability.
Addressing climate change impacts was also highlighted as crucial for Italy’s macroeconomic stability given its reliance on agriculture and energy imports. Strengthening energy infrastructure and accelerating renewable energy transition are essential steps outlined by the IMF.
Overall, the IMF appreciated the Italian authorities' cooperation during discussions: "We are grateful to the Italian authorities and our other counterparts for their time, frank and open discussions."