Italy
Profile written September 2026 · figures updated nightly
Where things stand
The latest published reading for each measure, with the last five years beside it.
the ECB's rate, which Italy has shared since 1999
01Structure
Italy is the second-largest manufacturer in the European Union and organises that manufacturing in a way no other member does: through distretti industriali, geographic clusters of small and medium-sized firms that specialise in one product family and share suppliers, skills and machinery.1 Textiles and fashion in Lombardy, Veneto, Tuscany and Emilia-Romagna; machinery and packaging around Bologna; eyewear in Belluno.
The model produces exceptional flexibility and exceptional exposure at the same time. Clusters respond to demand shifts faster than a large integrated firm can, and they are also too small individually to absorb a shock, to fund research at scale, or to survive a generational succession — which is why research spending, at under one and a half per cent of GDP, is the lowest of the large European economies.
The other structural fact is geographic. Labour participation in the southern regions runs below fifty per cent against above seventy in the north,2 a gap that has persisted through every policy aimed at it since unification, and which makes any national average for Italy the average of two quite different economies.
02Trade and exposure
Italy exports about a third of its output and runs a substantial manufacturing surplus — some €97 billion in 2025, the great majority of it earned by manufacturing.1 For an economy whose public finances are as constrained as section 05 describes, that external surplus is what makes the arithmetic hold.
The United States takes roughly a tenth of Italian exports, and the composition — machinery, fashion, food, furniture — is unusually tariff-exposed because it is largely final goods sold on brand and design rather than intermediate goods embedded in someone else's supply chain. A tariff on a German gearbox is absorbed somewhere down the chain; a tariff on an Italian handbag is paid at the till.
03Energy and resources
Italy imports close to three quarters of the energy it uses, the highest dependency of any large economy on this site, and it has almost no domestic fossil production to fall back on. Nuclear generation was abandoned by referendum in 1987 and never restarted.
The dependency is sharper than the ratio suggests because of how Italian electricity is priced: natural gas sets the marginal price of power in about eighty-nine per cent of hours, the highest share in the European Union.3 A movement in the gas price therefore passes through to industrial and household electricity almost undiluted, where in France or Germany it is buffered by nuclear or by wind and solar.
Supply has been diversified since 2022 — Algeria by pipeline, Qatar and the United States as LNG, with Qatari cargoes making up about a third of Italian LNG in 20253 — but diversification changes who sells the gas, not the fact that gas sets the price.
04Labour and demography
The employment rate among 20- to 64-year-olds is around sixty-eight per cent, the lowest of the large European economies and roughly thirteen points below Germany's. Youth unemployment runs near nineteen per cent. Both figures are national averages across the regional divide described in section 01, and the southern half of that divide is what produces them.
Underneath sits demography. The population is shrinking by roughly three tenths of a per cent a year,2 emigration of graduates has run in one direction for two decades, and the working-age share is falling faster than in France or the United Kingdom. An economy of small firms facing succession without heirs is the labour constraint and the structural constraint at once.
05Public finances
Government debt stands near a hundred and thirty-eight per cent of GDP, the highest in the euro area after Greece, and is projected to rise further.2 That figure is the Maastricht measure, so it is directly comparable with the German and French pages — the contrast with Germany's is the single largest divergence within the currency union.
The deficit itself is not the problem it once was: it has been brought near three per cent of output, and Italy has run a primary surplus in most years for three decades. The debt stock is a legacy of the 1980s and early 1990s rather than of current spending, and the constraint it imposes is refinancing rather than borrowing.
The Recovery and Resilience Plan is the largest of any member state and is currently the main source of public investment. Its deadlines are the binding constraint on Italian capital spending in a way no domestic fiscal rule is.
06Money and prices
Italy has set no policy rate of its own since 1999; the rate shown above is the European Central Bank's. For Italy that membership carries a particular weight, because a debt stock of this size is refinanced continuously and the cost of doing so is the spread over German paper rather than the policy rate itself.
That is the mechanism through which monetary policy reaches Italy most forcefully, and it is not visible in the policy rate in the panel above. A change in the ECB's stance moves Italian financing conditions by more than it moves German ones, for the same decision.
07What the models expect
These are computed on this site from each series' own history, and are nobody's official projection. The bar is the range the figure lands in half the time; the dot is the central path.
Replayed from past origins on today's revised figures, the same baseline was usually off by 0.83 on consumer price inflation, 2.69 on real gdp, 0.38 on unemployment rate, 0.60 on central bank policy rate, 4.30 on government debt.
08Structural indicators
The figures behind the sections above. They move by a point or two a year, so each carries the year it was measured.
| Measure | Value | Year | Source |
|---|---|---|---|
| Industry, share of gross value added | 16.8% | 2025 | Eurostat |
| Exports, share of GDP | 32.2% | 2025 | Eurostat |
| Energy import dependency | 73.9% | 2024 | Eurostat |
| R&D spending, share of GDP | 1.38% | 2024 | Eurostat |
| Employment rate, ages 20–64 | 67.6% | 2025 | Eurostat |
| Youth unemployment rate | 18.9% | Jul 2026 | Eurostat |
| Government deficit | −3.1% | 2025 | Eurostat |
| Manufacturing trade surplus | €97.4bn | 2025 | ISTAT |
| Hours where gas sets the power price | ~89% | 2025 | market analysis |
09Sources and method
Live figures: Eurostat, Bank for International Settlements. Each is fetched nightly and validated before publication; the delivery report on /status/ says how old every one of them is. Profile written 2026-09-10, next review September 2027.
- Industrial districts, the manufacturing surplus and export markets — Intesa Sanpaolo, districts report 2026; Made in Italy
- Debt ratio, the regional participation gap and population decline — OECD Economic Surveys: Italy 2026; European Commission, forecast for Italy
- Energy dependency, gas as marginal price-setter and LNG sourcing — Italy 2026: Europe's most exposed energy importer