The Italian gross domestic product expanded by 0.3% in the first quarter of 2025, accelerating from the modest 0.1% growth rate recorded in the previous period and aligning with the initial official estimate.
Italian GDP growth confirmed at 0.3%
This outcome also surpassed early market expectations, which had anticipated a more cautious 0.2% increase. It marked the sharpest quarterly growth pace in a full year, signaling renewed momentum in the Italian economy. This improved performance was underpinned by a combination of factors, including persistently lower interest rates and growing investor confidence in Italy’s sovereign debt, which, despite its reputation for volatility, showed signs of relative stabilization and attractiveness to capital markets.
Investment activity, a key driver of the expansion, demonstrated notable strength with gross fixed investment rising by 1.4%. This boost was broadly supported by gains in construction, where investment in buildings and structures increased by 1.6%, reflecting a sustained pickup in real estate development and infrastructure projects. Additionally, machinery and equipment purchases edged up by 0.6%, suggesting businesses were beginning to upgrade capacity and modernize production lines amid improving economic prospects.
Household consumption also contributed positively, growing by 0.6%, likely reflecting increased consumer confidence and disposable income, possibly supported by stable employment conditions and moderate inflation pressures. Public expenditure further accelerated, climbing 0.7%, indicative of ongoing fiscal support and government spending aimed at stimulating growth and addressing social priorities.
External sector slowed
However, the external sector weighed on overall GDP growth during the quarter. While exports continued to grow, they did so at a slower rate of 0.8%, hindered by uneven global demand and lingering trade uncertainties. Meanwhile, imports surged significantly by 4.3%, reflecting stronger domestic demand for foreign goods and intermediate inputs. As a result, net external demand subtracted from the GDP expansion, underscoring ongoing challenges in achieving a balanced trade contribution to growth.
Overall, the first-quarter figures paint a cautiously optimistic picture of the Italian economy, which appears to be regaining traction after a period of subdued growth, benefiting from supportive monetary conditions, stronger investment, and resilient domestic consumption, even as external vulnerabilities persist.
