How does a country bounce back from economic troubles? Italy is showing the world exactly how it’s done, surprising experts who thought weak trade would drag down the economy. The country’s GDP grew by 0.1% in the third quarter of 2025, erasing a previous decline and proving that sometimes the underdogs can win.
Italy’s surprising 0.1% GDP growth proves that economic underdogs can defy expert predictions and stage remarkable comebacks.
Italy’s recovery story reads like a classic comeback tale. While exports struggled and global trade uncertainty created headwinds, the country found strength from within. Domestic demand became the hero of this economic story, contributing 0.8 percentage points to growth in 2025. Think of it like a family deciding to support local businesses instead of shopping online during tough times.
Investment growth accelerated impressively, jumping from 0.5% in 2024 to 1.2% in 2025. Companies started spending money on plants and machinery, which grew by 2.5% in the third quarter alone. The National Recovery and Resilience Plan helped fuel this investment boom, like a well-timed boost of energy during a marathon race. For investors seeking stability during uncertain times, focusing on defensive sectors like utilities and healthcare can provide more resilient returns.
Italian workers also played a *vital* role in this turnaround. Employment grew by 1.1% in 2025, actually outpacing GDP growth. This means more people found jobs even while the economy was still recovering. Unemployment is expected to drop to 6.0% in 2025 and 5.8% in 2026, giving families more confidence to spend money.
Private consumption held steady at 0.7% growth, supported by wage increases and job creation. Italians kept spending despite choosing to save more money, showing smart financial planning during uncertain times. Household consumption accounts for the largest share of Italy’s economic activity at 61% of total GDP.
The numbers paint an optimistic picture for the future. Annual GDP growth is projected between 0.4% and 0.6% for 2025, with continued improvement expected in 2026 and 2027. Inflation remains manageable at 1.7% in 2025, thanks partly to lower energy costs. Net foreign demand negatively impacted growth by contributing minus 0.2 percentage points, highlighting how domestic strength compensated for external weaknesses.
Even credit rating agency Moody’s took notice, upgrading Italy’s outlook to positive in May 2025. This domestic-driven recovery proves that sometimes the best solutions come from within, even when global winds are blowing against you.
