Scope: Assessment of the Italian economy from 2019 to September 2026, with particular attention to the period after October 2022, verification of the five “overtakings” attributed to the government’s narrative, and comparison with France, Germany, the United Kingdom, the United States, Japan, and the rest of the G7; perspective horizon 2027-2031.

Executive Summary / BLUF

The official documentation available as of September 11, 2026, does not support either the thesis of an economically immobile Italy or the more ambitious one of a country that has now structurally surpassed its main advanced competitors: instead, it shows an economy that has significantly strengthened employment, contractual stability, the primary balance, relative fiscal credibility, and nominal exports , but which continues to suffer from weak potential growth, modest productivity, real wages still deeply below pre-inflation levels, an exceptionally low employment rate compared to the EU, public debt close to 138% of GDP, and demographic and energy vulnerability .

The labor market represents the most difficult-to-dispute progress: in July 2026, Italy had 24.37 million employed people , 307,000 more than in July 2025; the employment rate for 15-64 year-olds had risen to 63.2% , unemployment had fallen to 5.8% , permanent employees had reached 16.583 million , and temporary employees had decreased by 82,000 in twelve months. But this result does not justify describing the Italian labor market as one of the best in Europe: on the harmonized Eurostat metric for 20-64 year-olds, Italy in 2025 still had the lowest employment rate in the entire EU, 67.6%, versus 76.1% in the EU . Istat — Employment and unemployment, July 2026 Eurostat — EU employment rate grew above 76% in 2025

The second key correction concerns workers’ well-being: according to the OECD, in the first quarter of 2026, Italian real wages were still 6.1% lower than in the first quarter of 2021 , the widest gap among the large OECD economies analyzed, despite real growth of 1.3% year-on-year. The OECD also forecasts, in its 2026 scenario, a further real contraction of 0.9% in 2026, followed by just +0.2% in 2027. Employment growth accompanied by an incomplete wage recovery is therefore a real macroeconomic improvement, but not yet evidence of a general increase in living standards. OECD Employment Outlook 2026 — Italy

On debt, the representation that the United States will be “more indebted than Italy” has a precise statistical basis only if it is presented as an IMF projection on a comparable definition of general government gross debt : in the April 2026 Fiscal Monitor, US debt increases from 123.9% of GDP in 2025 to 142.1% in 2031 , while Italy’s Article IV places Italian debt from 137.1% in 2025 to 138.2% in 2026-27 , then gradually decreasing to 136.1% in 2031. The expected overtaking is therefore real in the IMF baseline, but remains a forecast conditional on current policies and does not imply equivalence in the financing capacity, monetary sovereignty or sovereign risk of the two countries. IMF — Fiscal Monitor April 2026, Statistical Appendix IMF — Italy 2026 Article IV Consultation

The thesis of Italy overtaking France in sovereign interest rates requires greater precision: the convergence is extraordinary compared to recent history, but the ECB harmonized series still shows an average ten-year yield of 3.84% for Italy versus 3.74% for France in May 2026, a difference of just 10 basis points , while Germany was at 3.05% . Therefore, a formulation according to which Italy “pays less interest than France” cannot be transformed into a structural statement without indicating the date, title, maturity and market price , since the result can occur punctually without being valid on the harmonized monthly average. ECB — Italy long-term government interest rate ECB — France long-term government interest rate

Finally, the real economy has not yet shown an acceleration consistent with a narrative of full structural overtaking: the IMF records Italian real GDP growth of just 0.5% in 2025 ; ISTAT estimates a quarterly growth of 0.2% in the second quarter of 2026 and acquired growth of 0.8% for 2026 , while industrial production, after declining by 0.2% in the whole of 2025 , shows an uneven recovery in the first seven months of 2026, with a monthly growth of 0.7% in July but still highly divergent sectoral variations. ISTAT — Note on the performance of the Italian economy, July-August 2026

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Italy of the five “overtakes”: stronger, not yet faster

In 2026, Italy presents a paradox that political communication tends to compress into a ranking: employment at its highest, a near-zero spread with France, exports close to Japan, and a debt trajectory that, according to the IMF’s baseline, becomes more favorable than that of the United States. At the same time, real GDP grew by just 0.5% in 2025 , real wages in the first quarter of 2026 remained 6.1% below the level of the first quarter of 2021 , and potential growth remains confined to around 0.6-0.7% . The point is not to establish whether the “overtakings” are true or false in absolute terms, but to understand what they measure: Italy has become more resilient, more employed, and fiscally more credible, but it has not yet demonstrated that it has become a structurally more productive economy.

Per capita GDP improves because Italy holds up while others fall back

The first overtaking concern per capita GDP. Italy’s cumulative performance appears relatively favorable compared to several G7 economies, but this figure must be separated from aggregate GDP: in 2025 , Italian real GDP grew by 0.5% , compared to 0.2% in Germany , 0.9% in France , 1.3% in the United Kingdom , 2.1% in the United States , 1.2% in Japan , and 1.7% in Canada . Italy’s advantage in per capita GDP therefore also stems from demographics: with a substantially stagnant population, approximately 58.9 million residents at the beginning of 2026 , growth in per capita GDP can outperform that of countries with growing populations even when overall GDP grows less. Italy can therefore gain ground in per capita income without having yet improved productivity per hour worked or growth potential to a comparable extent.

This is the data that puts the political significance of the overtaking into perspective. The IMF estimates Italy’s potential growth of just 0.6-0.7% annually in the medium term, and productivity growth in industry, including construction, of 0.4% in 2026 , 0.7% in 2027 , and approximately 0.5% annually from 2028 to 2031. Relatively favorable per capita growth can therefore coexist with a sluggish aggregate economy. Italy’s performance is real, but it primarily reflects greater resilience compared to Germany and other competitors, not yet a shift in production regime.

Italian exports are a structural force, but Japan is not yet behind in annual data

The second overtaking is the easiest to overinterpret. In 2025, the WTO recorded merchandise exports of approximately 738 billion dollars from Japan and 726 billion from Italy : Tokyo therefore remained ahead by approximately 12 billion dollars . Italy, however, has drastically reduced the gap, and in 2025, ISTAT recorded an increase in merchandise exports of 3.3% in value and a trade surplus of 50.746 billion euros , with pharmaceuticals at +28.5% , metals and metal products at +9.8% , other means of transport at +11.6% and food, beverages and tobacco at +4.3% . In the first half of 2026, Italian exports grew by a further 4.5% year-on-year .

The industrially relevant factor is therefore not the ranking, but the quality of the convergence. In 2025, Japan exported 110.4 trillion yen , with 21.9% of the total concentrated in transportation equipment, 17.9% in machinery, and 16.8% in electrical machinery; Italy has come close in nominal value through a more fragmented but highly diversified manufacturing structure. A comparison in dollars, however, remains sensitive to exchange rates: the depreciation of the yen reduces the international value of Japanese exports even without an equivalent decline in volumes. The “overtaking” may therefore emerge over rolling time windows of 2025-2026, but it is not yet true for the entire year 2025 and does not in itself demonstrate that Italy has surpassed Japan in real production capacity or technological added value.

Work is the best result, but Italy remains last in the EU for employment rate

The improvement in the labor market is hard to dispute. In July 2026, the number of employed people reached 24.370 million , 307,000 more than a year earlier; the employment rate for 15-64 year-olds rose to 63.2% , unemployment fell to 5.8% , permanent employees increased by 303,000 to 16.583 million , while temporary workers decreased by 82,000 to 2.486 million . The number of inactive 15-64 year-olds also decreased by around 307,000 in twelve months . This is not simply a statistical effect: more people are working, and a growing share have a permanent contract.

But a European comparison reverses the assessment of the level. In 2025, Italy’s employment rate for 20-64 year-olds was 67.6% , compared to 76.1% in the European Union : an 8.5 percentage point difference , placing it last in the EU. Low unemployment therefore does not eliminate the problem of low participation, especially among women and young people. And above all, employment has not yet produced an equivalent recovery in wages: in the first quarter of 2026, real Italian wages were still 6.1% lower than in the first quarter of 2021 , while in 2025, real contractual wages were still around 8.8% below January 2021. The labor market is stronger; labor’s purchasing power has not yet recovered from the inflationary shock.

Rome gains credibility while Paris loses it

The convergence between Italy and France on sovereign yields is real, but the correct meaning is relative. In May 2026, the average 10-year harmonized yield was 3.84% for Italy and 3.74% for France , compared to 3.05% for Germany : just 10 basis points separated Rome from Paris. This figure is exceptional compared to the previous decade, but it does not demonstrate that Italian sovereign risk has become structurally lower than that of France.

The movement stems from two forces. Italy has improved its fiscal profile: in 2025 , the deficit was around 3.1% of GDP and the primary balance had returned to positive territory, around 0.8% of GDP . Meanwhile, France has recorded a deficit of around 5.1% of GDP and a debt ratio of 115.7% , with a projected trajectory above 120% of GDP in subsequent years. The near-parity of returns is therefore both a relative boost for Italy and a relative deterioration for France. Rome has become more credible, but continues to have a much higher public debt and lower potential growth.

The United States can surpass Italy on debt, but not on the type of risk

The fifth overtaking is supported by IMF projections, but it is a prediction, not a fact. In the April 2026 Fiscal Monitor, US gross public debt increases from 123.9% of GDP in 2025 to 125.8% in 2026 , 128.6% in 2027 , 132.1% in 2028 , 135.5% in 2029 , 138.9% in 2030 , and 142.1% in 2031 . For Italy, Article IV 2026 indicates 137.1% in 2025 , 138.2% in 2026 and 2027 , 137.5% in 2028 , 136.7% in 2029 , 136.3% in 2030 and 136.1% in 2031. The crossover would therefore occur between 2029 and 2030 , not simply “in 2031”.

The comparison points to a real fiscal divergence: Washington’s situation deteriorates rapidly, while Rome, in the baseline scenario, stabilizes and then slowly reduces its debt-to-GDP ratio. But this does not mean risk equivalence. The United States issues in the world’s reserve currency, controls its own monetary policy, and controls the Treasury market; Italy operates in the euro and does not independently control its currency. Furthermore, the IMF estimates that Italy’s interest expenditure will increase from €87.1 billion in 2025 to €95.2 billion in 2026 , €105.4 billion in 2028 , and €122.8 billion in 2031. Italian debt may become relatively lower than that of the United States while remaining one of the main constraints on national economic policy.

The part that the overtaking does not show decides whether the improvement can last

Industrial production sheds light on the problem. In 2025 , the Italian index decreased by 0.2% ; in July 2026, it increased by 0.7% compared to the previous month but remained unchanged compared to July 2025 , with pharmaceuticals at +7.4% , computers-electronics-optics at +2.4% , chemicals at -3.4% , and electrical equipment at -2.8% . Exports can therefore grow while the overall industrial base stagnates, as the most competitive sectors gain market share and value while others lose production.

Investments provide a better signal: the IMF estimates +3.5% in 2025 and +2.3% in 2026 , while public investment in 2025 increased by 9.6% , also supported by the NRRP. The problem is what will remain after the extraordinary phase is over. Italy’s research and development intensity was equal to 1.37% of GDP , compared to approximately 3.1% in Germany and 2.2% in France ; in 2025, approximately 16.5% of Italian companies with at least ten employees used artificial intelligence technologies, compared to an EU average of 20% . Without a sustained increase in research, intangible capital, and the size of productive companies, the NRRP may increase investment without sufficiently increasing productivity.

Energy vulnerability adds a second industrial constraint: over 70% of Italy’s energy consumption continues to depend on imported fossil fuels, according to the IMF. As of July 2026, industrial producer prices had increased by 7.8% year-on-year and by 9.3% on the domestic market ; excluding energy, the domestic increase was reduced to 3.3% . For a manufacturing economy, this differential directly impacts margins, competitiveness, and investment capacity.

Demography and the South set the physical limit to growth

As of January 1, 2026, Italy had 58.943 million residents ; in 2025, there were 355,000 births and 652,000 deaths , a negative natural balance of almost 300,000 people , substantially offset by a positive migration balance of approximately 296,000 . Fertility fell to 1.14 children per woman , a historic low; the over-65s numbered 14.821 million , 25.1% of the population , while the 15-64 age group fell to 37.270 million . Increasing the number of employed people cannot therefore represent the main source of growth indefinitely: with a progressively smaller workforce, productivity will have to provide an increasing share of the increase in GDP.

Southern Italy exhibits the same tension between cyclical improvement and structural fragility. In 2025, real GDP in the South grew by 0.6% , slightly more than in the Center-North, while employment increased by 1.5% ; in the same year, however, the Southern population decreased by 3.1 per thousand . On a social level, 22.6% of the Italian population was still at risk of poverty or social exclusion in 2025, and severe material and social deprivation rose from 4.6% to 5.2% . Recent growth has therefore improved employment and aggregate incomes without eliminating either the territorial divide or the deepest pockets of vulnerability.

The next 24 months will separate resilience from transformation

Between 2027 and 2030, it will be clear whether the four-year period 2022-2026 marked the beginning of a transformation or a phase of extraordinary resilience. The test is quantifiable: private investment will have to gradually replace the extraordinary boost provided by the NRRP; productivity will have to accelerate beyond the current rate of 0.4-0.7% ; the employment rate will have to converge from 67.6% in Italy to 76.1% in Europe ; real wages will have to recover the 6.1% lost compared to the first quarter of 2021 ; industrial production will have to return to growth, not only in some export-oriented sectors; and debt will have to decline, thanks not only to primary surpluses, but also to a more dynamic real GDP denominator.

If these changes occur, the five “overtakings” could be interpreted retrospectively as the first signs of a regime shift. If GDP remains close to 0.5-1% annually , productivity remains close to 0.5%, investment loses momentum after the PNRR, and industry continues to hover around stagnation, the conclusion will be different: Italy will have proven itself less vulnerable , not yet more dynamic . The cost would fall on workers through weak real wages, on businesses through lower productivity and more expensive energy, and on the public budget through an aging population and interest expenditure that, according to IMF projections, reaches €122.8 billion in 2031. The true Italian turning point will not be certified by the next overtaking in the rankings, but when productivity, wages, and private investment grow enough to make those overtakings no longer relative, but structural.

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Index

I. The five overtakings

GDP per capita; Italy-Japan exports; employment and unemployment; Italy-France sovereign risk; Italy-United States debt.

II. The part of the economy that overtaking does not measure

Productivity; real wages; industrial production; investment; demographics; innovation; energy; disposable income; Southern Italy; potential growth.

III. The structural judgment

How much of the improvement since 2022 comes from Italy, how much from the deterioration of competitors, how much from cyclical factors, and how much can survive the end of the PNRR and demographic deterioration.

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Extract

Italy is stronger than three years ago, but the leap is mainly relative, employment-related and financial.

The most important finding emerging from the preliminary assessment is not that the five “overtakings” are invented; on the contrary, several underlying elements are statistically real and represent changes that a neutral analysis must recognize. The improvement in employment is real; the sharp reduction in the risk differential versus France is real; Italy’s ability to maintain a large non-energy trade surplus and an overall trade surplus is real; the fiscal consolidation that has brought the country back to a primary surplus is real; and the assumption that the United States’ debt-to-GDP ratio will exceed Italy’s by 2031 is actually included in the IMF baseline. However, in July 2026, the IMF simultaneously described Italy as an economy that continues to grow at a “modest” pace , indicating +0.5% of real GDP in 2025 , a strengthened primary surplus, and a public debt that remains “too high and vulnerable to interest and growth shocks.” This combination is precisely why a snapshot based solely on relative rankings risks producing a correct picture in the individual statistics but an incomplete one in the overall diagnosis. IMF Executive Board Concludes 2026 Article IV Consultation with Italy

The methodologically decisive point is to distinguish between absolute and relative performance . In 2025, according to the WEO of April 2026, the Italian economy grew by 0.5% , against 0.2% in Germany , but less than France (0.9%) , the United Kingdom (1.3%) , the United States (2.1%) , Japan (1.2%) , and Canada (1.7% ); in 2026, the same WEO placed Italy at 0.5% , against Germany (0.8%), France (0.9%), the United Kingdom (0.8%), Japan (0.7%), Canada (1.5%), and the United States (2.3%). An “overtaking” based on per capita GDP can therefore coexist perfectly with one of the weakest aggregate growth rates in the G7, because the real numerator must be related to a stagnant or decreasing Italian population, while in the United States, Canada, and the United Kingdom, demographic expansion dilutes per capita growth to a greater extent. IMF World Economic Outlook April 2026 — Real GDP growth

This distinction prevents us from automatically transforming the dynamics of GDP per capita into a measure of productive strengthening. To understand whether Italy is truly becoming richer, we need to break down the result into real GDP, population, people of working age, hours worked, and productivity per hour . The structural problem is already evident in the IMF Article IV projections, according to which productivity in industry, including construction, is estimated at +0.4% in 2026, +0.7% in 2027, and approximately +0.5% annually from 2028 to 2031 , while the economy’s growth potential is estimated at around 0.6-0.7% annually . A country can therefore improve its ranking in GDP per capita without having addressed the main weakness that limits its ability to generate future income. IMF — Italy: 2026 Article IV Staff Report

Work: Progress is substantial, but the ranking changes if we measure employment rather than unemployment

The labor market is probably the clearest example of a politically favorable statistic that is true but requires a second statistic to be interpreted . ISTAT records 24.370 million employed people in July 2026 , with an increase of 307,000 units in twelve months and an unemployment rate of 5.8% . Above all, the composition of the increase is qualitatively better than what would emerge from a simple expansion of temporary contracts, because compared to July 2025, permanent employees increased by 303,000 , self-employed workers by 85,000 , while fixed-term employees decreased by 82,000 . Inactive people aged 15-64 also decreased by approximately 307,000 on an annual basis. ISTAT — Employed and unemployed, July 2026

But Eurostat shows why the phrase “Italy has climbed the employment rankings” needs to be qualified: in 2025 , taking the population aged 20 to 64—the standard European metric for the employment rate—Italy was at 67.6% , last in the EU, against the EU average of 76.1% , while Malta was at 83.6%, the Netherlands at 83.4%, and Czechia at 82.9%. Unemployment can decrease while employment remains relatively low because the denominator of unemployment is the labor force , not the entire working-age population; those not actively seeking employment are not classified as unemployed. Consequently, the Italian result must be judged strongly positive in terms of change , but still weak in comparison with European levels . Eurostat — EU’s employment rate grew above 76% in 2025

ISTAT also introduces a demographic element that will be central to the dossier: between 2021 and 2026, employment rate growth affected all age groups except the youngest, and was particularly marked among those aged 50-64, +7.8 percentage points . The Institute also explicitly links this phenomenon to the progressive aging of the population and pension reforms. It is therefore possible that part of the employment performance is both economically positive and demographically defensive: more older people remain in the labor market, increasing employment and mitigating the effects of the contraction of the working population, without this equating to an acceleration of productivity or the entry of young people. ISTAT — Note on the performance of the Italian economy, July-August 2026

Wages: The main counterweight to the employment narrative

Wage weakness substantially changes the social interpretation of employment improvements. The OECD Employment Outlook 2026 finds that, after the inflationary surge that began in 2021, Italian real wages in the first quarter of 2026 were still 6.1% below the level of the first quarter of 2021 , despite a 1.3% recovery compared to the previous year; in the economic report on Italy, the OECD also notes that real contractual wages in 2025 were still around 8.8% lower than in January 2021. In other words, Italy has created more jobs without having yet fully replenished the purchasing power lost in the inflationary shock. OECD Employment Outlook 2026 — Italy OECD Economic Surveys: Italy 2026

The picture, however, is not entirely negative: the OECD reports that the combination of increased employment and rising nominal wages has driven per capita household income to its highest levels in the last 15 years , while measures such as tax credits, contributions, and social protection have supported low-income earners to a greater extent. This means that wage decline and improved aggregate household income can coexist, because more family members can be employed and because transfers and taxes alter disposable income. This is precisely why the final report will never use “wages,” “disposable income,” and “standard of living” as synonyms.

Exports: genuine strength, but overtaking Japan must be isolated from exchange rate effects

Italian exports represent one of the most structurally solid components of the picture. ISTAT records a 3.3% increase in the value of merchandise exports in 2025 compared to 2024 and an overall trade surplus of €50.746 billion , compared to €48.287 billion in 2024; growth was driven primarily by pharmaceuticals (+28.5%) , metals and metal products (+9.8%) , means of transport other than motor vehicles (+11.6%) , and food, beverages, and tobacco (+4.3%) . ISTAT — Foreign Trade, December 2025

The momentum continued in the first half of 2026: Italian exports increased by 4.5% compared to the same period in 2025, with particularly strong contributions from metals and metal products (+28.9%) , refined petroleum products (+23.3%) , and motor vehicles (+8.3% ). ISTAT — Foreign Trade, June 2026

However, the “overtaking” of Japan should not yet be classified as a real volume result based solely on values ​​converted into dollars. The Japanese Ministry of Finance publishes 2025 values ​​in current yen , while ISTAT publishes Italian values ​​in current euros ; to establish the global ranking, both must be reported in a common currency according to the WTO methodology and, above all, verify how much of the relative variation depends on the depreciation of the yen. Japanese customs statistics identify 2025 as a revised annual figure and specify that the series are expressed in thousands of yen. Japan Ministry of Finance — Trade Statistics of Japan

Preliminary assessment: Italy’s export strength is real ; the phrase “Italy above Japan” is, however, until the WTO-currency-volume reconciliation is concluded, true only in the specific nominal international measure that will be verified in the dedicated chapter , not yet proof that Italy has surpassed Japan in real production capacity or exported added value.

Italy-France: An exceptional market convergence, not a credit equivalence

The convergence between BTPs and OATs is probably the most significant relative financial change among the five claims. The ECB harmonized series for ten-year government bonds shows Italy at 3.84% in May 2026 , France at 3.74% , and Germany at 3.05% . Just 10 basis points separated Italy and France, while Italy paid about 79 basis points more than Germany.

This result is significant because in the previous sovereign debt crisis, Italy was treated by the market as a risk clearly distinct from the Franco-German core. However, the current data cannot be interpreted as a simple promotion of Italy into the same fiscal category as France, because the tightening incorporates two simultaneous movements: a reduction in the relative premium over Italy and a deterioration in the French fiscal perception . The dossier should therefore break down the movement into BTP-Bunds and OAT-Bunds rather than solely observing BTP-OATs. The ECB methodology also specifies that these are harmonized statistics on long-term rates, expressed as the average of observations over the period and referring to instruments with a maturity of around ten years: a single market session in which the Italian yield falls below the French one does not equate to a permanent inversion of the sovereign yield curve. ECB — Long-term interest rate statistics methodology

Debt: US overtaking is contained in projections, but the political conclusion requires extreme caution

The IMF Fiscal Monitor for April 2026 provides a comparable baseline of general government gross debt for advanced economies. For the United States, the ratio is estimated at 123.9% in 2025 , 125.8% in 2026 , 128.6% in 2027 , 132.1% in 2028 , 135.5% in 2029 , 138.9% in 2030 , and 142.1% in 2031. IMF Fiscal Monitor April 2026 — Table A7

For Italy, the July 2026 IMF Article IV indicates 137.1% in 2025 , 138.2% in 2026 , 138.2% in 2027 , 137.5% in 2028 , 136.7% in 2029 , 136.3% in 2030 and 136.1% in 2031. The point of intersection of the baseline is therefore between 2029 and 2030 : in 2029 Italy is still at 136.7% against 135.5% in the USA; in 2030 the United States rises to 138.9% and Italy falls to 136.3%. Saying that “in 2031 the United States will have more debt than Italy” is therefore formally consistent with the IMF projection, but the overtaking in the model already occurs by 2030.

This does not make the risk equivalent. The United States issues its debt in the dominant reserve currency and has a Treasury market with global depth unmatched by the eurozone; Italy, on the other hand, is a national issuer within a monetary union and does not independently control monetary policy. Consequently, the debt-to-GDP ratio is essential for fiscal sustainability but is not a sufficient measure of sovereign financing capacity. More importantly, Italy’s trajectory is not without pressure: according to the IMF, public sector interest payments would increase from €87.1 billion in 2025 to €95.2 billion in 2026, €105.4 billion in 2028, and €122.8 billion in 2031 , despite the projected stabilization of the debt-to-GDP ratio.

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Key Evidence Table

Indicator	Value/status verified	Period	Definition	Preliminary evaluation
Real GDP Italy	+0,5%	2025	real annual growth	Weak at all costs
PIL Q2 Italia	+0,2% q/q	Q2 2026	seasonally adjusted	Modest expansion
Acquired GDP growth	+0,8%	2026	ISTAT, al Q2	Better than 2025, not a boom
Busy	24.370 million	lug. 2026	15+	Significant quantitative record
Busy a/a	+307.000	lug. 2026	annual variation	Real improvement
Unemployment	5,8%	lug. 2026	STATE	Very low historically
Occupation 20-64	67,6%	2025	Eurostat harmonized	Last EU
Average EU employment	76,1%	2025	Eurostat 20-64	Gap Italy -8.5 pp
Real salaries vs Q1 2021	-6,1%	Q1 2026	OECD	Main social weakness
Export, thank you	+3,3%	2025	nominal value	Strong
Commercial surplus	€50.746 billion	2025	THANKS	Strong external position
Export H1	+4,5%	H1 2026	y/y, value	Still favorable dynamics
Industrial production	-0,2%	2025	correct calendar	Exports and domestic industry diverge
Industrial production	+0,7% m/m	lug. 2026	seasonally adjusted	Recovery, not yet a structural trend
10-year BTP proxy	3,84%	May 2026	ECB, monthly average	Almost convergence with France
OAT proxy 10 anni	3,74%	May 2026	ECB, monthly average	Only 10 bp below Italy
Bund proxy 10 anni	3,05%	May 2026	ECB, monthly average	Germany maintains lead
Italy’s debt	138,2% PIL	2026	IMF, general government gross debt	Very high
Italy’s debt	136,1% PIL	2031 forecast	IMF baseline	Slow descent
US debt	125,8% PIL	2026	Comparable MFIs	Lower than Italy today
US debt	142,1% PIL	2031 forecast	IMF baseline	Superior in baseline
Italy’s primary surplus	1,2% PIL	2026 IMF	general government	Significant consolidation
Public deficit	-2,9% PIL	2026 IMF	general government	Return below 3% in the baseline

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First classification of the five “overtakings”

Claim	Preliminary verdict	Reason
GDP per capita: Italy second in the G7 for growth	PLAUSIBLE BUT DEFINITION-DEPENDENT	The result may be evident in real per capita GDP over a specific time period, especially given Italy’s weak demographic dynamics; it doesn’t mean second place in terms of income level or second place in terms of aggregate GDP growth.
Italian exports above Japan	TECHNICALLY POSSIBLE, TO BE RECONCILIATED	The strength of Italian exports is well documented; the international nominal ranking requires uniform conversion and separation of the yen effect.
Italy has climbed the employment rankings	Mostly true on dynamics; misleading on level.	Record employment and 5.8% unemployment, but the employment rate for 20-64 year-olds will still be the lowest in the EU in 2025.
Italy pays less interest than France	TRUE AT SPECIFIC MARKET POINTS / NOT STRUCTURALLY ESTABLISHED	Exceptional convergence; the ECB’s harmonized average for May keeps Italy 10 basis points above France.
The US will have more debt than Italy	FORECAST, NOT FACT — BUT SUPPORTED BY THE IMF BASELINE	IMF 2031: USA 142.1%, Italy 136.1%; crossover between 2029 and 2030 in the baseline.

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Competing explanations

Hypothesis	Diagnostic evidence	Evidence to the contrary	Current standing
H1 — Italy has achieved a real structural improvement	Permanent employment, primary surplus, relative spread, exports, trade surplus	productivity, real wages, debt and potential growth remain weak	Partially supported
H2 — “Overtaking” is mostly due to the deterioration of others	France on yields; Japan and the exchange rate; Germany on growth; and the US on prospective debt.	Italy also shows independent home improvements	Highly relevant, but not the only explanation
H3 — The phenomenon is mainly statistical: denominators, currency, starting period	GDP per capita, exports in dollars, unemployment ranking, debt forecast	employment and fiscal balance also improve in absolute metrics	Decisive for some claims, insufficient to explain everything
H4 — Italy has improved resilience and credibility without yet significantly increasing productivity	employment, primary balance, spreads, and improved family incomes; productivity and real wages are fragile	any future acceleration of PNRR investments could change the framework	Currently the most consistent interpretation with the data set

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Principal Gaps and Watch Indicators

The first data point to be presented in Chapter 1 will be the G7’s real GDP per capita, based on a single homogeneous series, reconstructed for 2019-2025, 2022-2025, and 2022-2026 , because changing the starting year can radically alter the ranking. Nominal GDP per capita, real GDP per capita, PPP, and productivity per hour worked will also be separated.

The second will be the reconciliation of Italy-Japan exports using ISTAT/ICE, Japan Ministry of Finance and WTO , converting the values ​​using the same currency convention and distinguishing nominal value, volume, world market share and domestic value added.

The third will be the decomposition of the Italy-France spread from 2012 to 2026 into BTP-Bund, OAT-Bund and BTP-OAT , because only this decomposition allows us to identify how much of the convergence depends on the revaluation of Italy and how much on the deterioration of France.

The fourth will be the test of real well-being: real wages, disposable income per capita, consumption, poverty, housing costs, taxation, and savings, necessary to answer the most politically and economically important question: is the average Italian actually richer than in 2021-2022?

The fifth issue will determine the final outcome: productivity . If improved employment is not accompanied by sustained growth in output per hour worked, employment expansion can increase GDP and improve public finances in the short term without sufficiently altering long-term growth potential.

I. The five overtakings

1. GDP per capita: a real improvement, but the policy formulation mixes growth, level and well-being

The first claim—that Italy has outpaced all other G7 countries except the United States in terms of GDP per capita growth over the last ten years—is the most complex to evaluate because, contrary to what a synthetic graphical representation suggests, the result depends crucially on the definition of the variable, the starting year or quarter, the inflation adjustment, the treatment of the population, and whether one observes the growth rate or the absolute level of income per capita . The technically correct measure for verifying a real growth thesis is real GDP per capita , that is, gross domestic product adjusted for the effect of prices and divided by the population; however, it is not sufficient to use GDP per capita at current prices, because a nominal increase can largely reflect inflation. The OECD explicitly defines real GDP as a measure of value added adjusted for price changes and warns that, while fundamental for measuring economic activity, GDP alone is not a complete measure of household material well-being. OECD — Real Gross Domestic Product

The distinction is particularly important in the Italian case because, in August 2026, the Prime Minister emphasized that GDP per capita would have increased by almost 4,500 euros compared to 2022 ; this increase is compatible with the nominal series at current prices, but cannot be interpreted as an equivalent increase in purchasing power, since the general price level has increased significantly between 2022 and 2025. A correct comparison must therefore separate at least four quantities: nominal GDP per capita, real GDP per capita, GDP per capita at purchasing power parity, and real disposable income of households per inhabitant . The fact that nominal GDP per capita increases by thousands of euros does not mean that the average citizen can purchase goods and services for a greater equivalent amount; similarly, the fact that real GDP per capita is growing more rapidly than in Germany or Canada does not imply that Italy has surpassed these countries in absolute income or productivity. OECD — GDP and Non-financial Accounts

The most recent economic data confirms, however, that Italy's real GDP per capita is not in absolute stagnation: in the first quarter of 2026, the OECD recorded real GDP per capita growth for Italy of 0.3% compared to the previous quarter , while real disposable household income per capita increased by 0.8% , after a contraction of 0.9% in the fourth quarter of 2025. In the same quarter, real GDP per capita in the United Kingdom increased by 0.6%; the OECD also reports that Italian real growth per capita remained positive while some other G7 economies experienced periods of greater weakness. OECD — Growth and economic well-being, first quarter 2026

The annual snapshot, however, prevents this result from being transformed into a narrative of exceptional growth. Harmonized OECD data reported by the British Office for National Statistics show that in 2025, Italy's real GDP per capita grew by 0.7% , exactly the same as Canada's, less than the United Kingdom ( +1.0% ) and significantly less than the United States and Japan, both at +1.6% . France grew by 0.6% and Germany by 0.3%. In the first quarter of 2026, Italy added a further +0.3% , while Germany and the United States recorded around +0.5%, the United Kingdom +0.6% and France a contraction of 0.2% in the series used by the ONS. This means that the ten-year primacy attributed to Italy cannot be interpreted as a general superiority year after year: it is a cumulative result strongly dependent on the choice of the starting point , that is, the indexation of a quarter of 2016 to 100 and the subsequent very weak performance of some competing economies, especially Germany, Canada and the United Kingdom. UK Office for National Statistics — GDP first quarterly estimate, April to June 2026

The demographic issue is equally important. Since GDP per capita is the ratio between real output and population, a country whose population is decreasing or stagnating can show higher growth in per capita output than a country with a significant population increase, even when its overall GDP is growing more slowly. Italy is precisely a case in which this arithmetic matters: the IMF estimates a population of approximately 58.88 million for 2026 , while continuing to define Italian economic growth as "modest" and assesses medium-term growth potential at around 0.6-0.7% per year , limited by aging and weak productivity. The relative result on GDP per capita can therefore be genuine without representing an equivalent acceleration in national productive capacity. IMF — Italy 2026 Article IV Consultation

Then there is the problem of political attribution. A graph that starts from the first quarter of 2016 and ends in 2026 measures ten years of Italian economic history , including different governments, the pandemic, the post-COVID rebound, the ECB's monetary policy, the National Recovery and Resilience Plan (NRRP), industrial investment incentives launched long before the current government, and the energy crisis. It cannot therefore be used seriously as a measure of the causal effect of a single government that took office in October 2022. The correct institutional formulation is therefore that Italy has recorded a relatively favorable cumulative performance of real GDP per capita compared to several G7 economies in the post-2016 and post-pandemic period , but this result does not equate to an overtaking in income levels or a demonstration of leadership in potential growth or productivity. Eurostat also recalls that real GDP per capita is a useful indicator of the dynamics of material living standards, but it is not a complete measure of economic well-being. Eurostat — Real GDP per capita methodology

Verdict: Broadly plausible as a cumulative comparison over a specific real per capita series and a specific time period; potentially misleading if presented as evidence that Italy has become the second-richest or most dynamic economy in the G7. The significant part of the story is not a "leapfrog" in level, but a relative improvement compared to economies that, over the same period, experienced particularly weak per capita growth.

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2. Italy-Japan exports: the overtaking is not yet true for the whole of 2025, while it exists for specific moving windows of 2025-2026

The second claim requires a much more drastic correction. The most authoritative international source for harmonized comparisons, the World Trade Organization, still places Japan ahead of Italy in global merchandise exports in 2025 : Japan is the sixth largest exporter with $738 billion , equal to 2.8% of global exports, while Italy is seventh with $726 billion , also around 2.8%; South Korea follows behind Italy with $709 billion. The difference between Japan and Italy is therefore approximately $12 billion , less than 2% of their respective nominal volumes, but sufficient to rule out the possibility that Italy has already overtaken Japan in the 2025 consolidated annual figure. WTO — Global Trade Outlook and Statistics, March 2026

The WTO data is particularly important because it uses a homogeneous international base expressed in current dollars , while the Italian and Japanese national statistics are published in euros and yen, respectively. In 2024, the WTO ranked Japan in fifth place with approximately 707 billion dollars , while Italy was even further behind; in 2025, the value of Japanese exports according to the WTO rose to 738 billion, with a nominal growth of approximately 4%, while Italy's reached 726 billion, with a growth of approximately 8% in dollars according to the WTO methodology, almost completely narrowing the gap. WTO — Global Trade Outlook and Statistics Update, October 2025

National statistics confirm this picture. The Japanese Ministry of Finance reports exports of 110,400,455 trillion yen for calendar 2025 , or approximately 110.4 trillion yen, up 3.1% from 2024; imports totaled 113.33 trillion yen, with a trade deficit of approximately 2.93 trillion yen. The composition of Japanese exports remains heavily concentrated in technology- and capital-intensive industrial sectors: transportation equipment totaled 24.14 trillion yen, or 21.9% of exports; machinery totaled 19.71 trillion yen, or 17.9% ; electrical machinery totaled 18.54 trillion yen, or 16.8% ; and motor vehicles totaled 17.61 trillion yen, or 16% of the total. Japan Ministry of Finance — Trade Statistics of Japan, 2025 revised data

Italy, meanwhile, has achieved a very robust trade performance. ISTAT records a 3.3% growth in merchandise exports in value for 2025 , accompanied by a trade surplus of €50.746 billion , compared to €48.287 billion in 2024. The increase was particularly strong in pharmaceuticals, chemical-medicinal products, and botanicals, +28.5% ; metals and metal products, +9.8% ; means of transport other than motor vehicles, +11.6% ; and food, beverages, and tobacco, +4.3% . ISTAT — Foreign Trade and Import Prices, December 2025

In the first half of 2026, Italy's performance remained favorable, and according to calculations using a rolling window from May 2025 to April 2026 , Italy temporarily overtook Japan. This type of comparison may be statistically correct, but must be defined with extreme precision: it is not a comparison between the calendar years 2025 or 2026, but rather between twelve rolling months, and it can change rapidly with the evolution of exchange rates and monthly flows. The Japanese documentation itself shows that the 2026 data is updated monthly and that, at the moment, the calendar year 2026 has not yet ended; therefore, a sentence such as "in 2026, Italy overtook Japan" cannot be considered an annual figure observed as of September 2026. Japan Ministry of Finance — Trade Statistics release calendar

There is also a currency issue that is not incidental. The WTO presents its rankings in current dollars; when a currency depreciates significantly against the dollar, the international value of exports expressed in dollars may decrease or increase less even if exports in the domestic currency increase. Japan can therefore lose positions in the dollar rankings without this corresponding to an equivalent decline in export quantities or real industrial value added. Conversely, Italy can gain positions thanks to both real export growth and sectoral composition, prices, and the euro/dollar exchange rate. The WTO specifies that its trade statistics in value terms are expressed in current dollars, while it publishes volume indices separately precisely because value and quantity are not the same thing. WTO — Statistics on Merchandise Trade

The most important economic conclusion, however, is positive for Italy: regardless of whether it has already overtaken Japan annually, the convergence is real and significant . A country with approximately 59 million inhabitants, devoid of large multinationals comparable in size to the major Japanese conglomerates and with a production structure based much more on SMEs and medium-sized enterprises, it now exports a value of goods very close to that of Japan, thanks to a highly diversified industrial base that includes mechanical engineering, pharmaceuticals, metal products, agri-food, luxury goods, nautical, aerospace, and specialized intermediate goods. ISTAT also notes that in 2025, 48.2% of Italian exports were directed to non-EU markets, a higher share than Germany, France, and Spain, and that the United States absorbed 10.8% of Italian goods exports , the second largest market after Germany at 11.4%. ISTAT — Report on the Competitiveness of Productive Sectors 2026

Opinion: False if referring to the entire calendar year 2025; not yet verifiable as an annual figure for 2026; true for certain rolling time windows 2025-2026. The underlying industrial substance is nevertheless significant: the gap between Italy and Japan in nominal merchandise exports is now minimal, and Italy's export capacity constitutes one of the national economy's most solid structural strengths.

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3. Employment and unemployment: the improvement is among the strongest data, but Italy remains last in the EU for employment rate

The third claim simultaneously contains one of the most solid economic results of recent times and one of the greatest risks of interpretation. In July 2026, ISTAT recorded 24.370 million employed people , a historic high in the current series, with 307,000 more employed people than in July 2025 , equal to +1.3%. The employment rate for 15-64 year-olds rose to 63.2% , 0.8 percentage points higher in twelve months, while the unemployment rate fell to 5.8% and the inactivity rate to 32.8%. The composition of the improvement is significant: permanent employees increased by 303,000 in one year to 16.583 million, self-employed workers by 85,000 to 5.301 million, while fixed-term employees decreased by 82,000 to 2.486 million. ISTAT — Employment and unemployment, July 2026

Furthermore, the reduction in unemployment is not solely due to people leaving the labor market. Compared to July 2025, the number of inactive people aged 15 to 64 has decreased by approximately 307,000 , while the number of unemployed has decreased by approximately 14,000; this figure weakens the plausibility of the interpretation that the decline in the unemployment rate is entirely due to people giving up looking for work. In the May-July 2026 quarter, compared to February-April, the number of employed people increased by a further 91,000 , while the number of inactive people decreased by 144,000.

The European comparison, however, changes radically when the unemployment rate is replaced with the employment rate , that is, the share of the working-age population actually working. Eurostat recorded an employment rate for 20-64 year-olds of 67.6% for Italy in 2025 , compared to an EU average of 76.1% : a gap of 8.5 percentage points . Italy was therefore still the country with the lowest employment rate in the entire European Union, ahead only of Romania at 69.0% and Greece at 71.0%, while Malta was at 83.6%, the Netherlands at 83.4%, and the Czech Republic at 82.9%. Eurostat — EU employment rate grew above 76% in 2025

This apparent contradiction—relatively low unemployment and exceptionally low employment—is perfectly consistent from a statistical perspective. The unemployment rate is calculated as the share of the unemployed in the labor force , i.e., employed people plus people actively seeking work; the employment rate, on the other hand, is calculated on the total population in the age group considered. A country can therefore have few officially unemployed people but simultaneously very many people out of the labor force. This is particularly relevant for Italy because the IMF continues to point to labor market participation , especially among women and young people, as one of the main structural weaknesses of the Italian economy, despite employment being near historic highs. IMF — Italy 2026 Article IV Consultation

The improvement, however, should not be underestimated. The IMF estimates that the Italian unemployment rate has fallen from 7.7% in 2023 to 6.6% in 2024 and 6.1% in 2025 , with a forecast of around 5.6% in 2026 before a slight rebound thereafter; the OECD also highlights that, between the first quarter of 2025 and the first quarter of 2026, Italy was among the few OECD countries where unemployment decreased by more than 0.2 percentage points. OECD Employment Outlook 2026

But employment cannot be assessed independently of productivity and wages. The IMF estimates productivity growth of just 0.4% in 2026 , 0.7% in 2027, and around 0.5% thereafter, while the OECD notes that in the first quarter of 2026, Italian real wages were still significantly below 2021 levels. An economy can therefore increase the number of people in employment and improve its social security and tax balance, but if each hour worked produces little additional value added and real wages recover slowly, improving employment does not automatically translate into a proportional increase in well-being.

Verdict: True and substantial regarding the improvement in employment and the decline in unemployment; incomplete if used to argue that the Italian labor market is already among the best in Europe. Italy has significantly improved its performance, but it starts with one of the lowest levels of participation and employment in the EU.

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4. Italy-France: the convergence of yields is real, but it does not mean that Italian sovereign risk has become lower than French risk.

The fourth "overtaking" is probably the most interesting from a financial perspective because it measures a relative transformation that the markets have effectively recognized, but the formula "Italy pays less interest than France" is too absolute. The ECB harmonized series on ten-year government yields shows that in May 2026, the average Italian rate was 3.84% , the French one 3.74% , and the German one 3.05% . The gap between Italy and France had therefore fallen to about 10 basis points , while Italy still paid about 79 basis points more than Germany. ECB — Long-term interest rates data portal

Compression is historically important because, for much of the last decade, the spread between Italian BTPs and French OATs was much wider. However, a harmonized monthly average must be distinguished from a return observed in a single market session: it may happen that, on a given day or for a specific benchmark security, the Italian yield temporarily falls below the French one, without this meaning that the entire Italian yield curve is permanently lower than the French one. The ECB defines these rates as long-term nominal yields calculated on comparable government bonds with a maturity of around ten years and the average of observations over the period. ECB — Convergence criteria and long-term interest rates methodology

The most interesting part is explaining why the gap has almost disappeared. This phenomenon isn't just due to an improvement in Italy. Italy has actually strengthened its relative fiscal position: the deficit fell to 3.1% of GDP in 2025 , the primary balance returned to positive territory at 0.8% , and the IMF recognizes that the fiscal outcome has outperformed its initial targets for the second consecutive year. IMF — Italy Staff Concluding Statement 2026

At the same time, however, France has seen its relative fiscal trajectory worsen. The IMF Fiscal Monitor for April 2026 estimates France's gross public debt rising from 116.0% of GDP in 2025 to 118.4% in 2026, 120.5% in 2027, and above 121% in 2028-2030 , while Italy remains much more indebted but shows a trajectory that tends to stabilize and then slowly decline after the peak in 2026-27. IMF Fiscal Monitor April 2026 — General Government Debt

It is therefore more accurate to speak of a convergence of perceived risk , determined by two simultaneous movements: an improvement in Italy's relative fiscal credibility and a deterioration in expectations for France. This is very different from saying that the two countries now have the same credit profile. Italy continues to have a debt-to-GDP ratio of around 138% , significantly higher than France's; the IMF explicitly defines Italian debt as "too high and vulnerable to interest and growth shocks," while interest costs continue to represent a very significant component of public spending.

It is also important to distinguish between market yield, rating, debt sustainability, and the average effective cost. The yield on the 10-year BTP measures the price currently demanded by the market to purchase new 10-year debt or equivalent instruments; it does not coincide with the average rate paid on the overall debt stock, which depends on the maturity structure, the historical cost of issuance, and the pace of refinancing. Even if BTPs and OATs converge, a large portion of Italian debt continues to be gradually refinanced, and the larger absolute stock makes interest rate dynamics particularly relevant for Rome.

Verdict: quasi-convergence is true; a one-off reversal is possible but episodic; the structural assertion that Italy now has a consistently lower cost of debt than France is false. The most important finding is not the single day of reversal, but rather the exceptional reduction in the relative risk differential.

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5. Italy-United States debt: the IMF predicts the US overtaking the US, but this is a projection and not a risk equivalence.

The fifth claim is the simplest to verify statistically, provided the same accounting definition is used. The IMF Fiscal Monitor for April 2026 , which largely applies the framework of the 2014 Government Finance Statistics Manual, estimates US general government gross debt at 123.9% of GDP in 2025 , 125.8% in 2026, 128.6% in 2027, 132.1% in 2028, 135.5% in 2029, 138.9% in 2030, and 142.1% in 2031. IMF Fiscal Monitor April 2026

For Italy, Article IV of July 2026 estimates general government gross debt at 137.1% in 2025 , 138.2% in 2026 and 2027 , 137.5% in 2028, 136.7% in 2029, 136.3% in 2030 and 136.1% in 2031. IMF — Italy 2026 Article IV Staff Report

The projection therefore implies a crossover point before 2031. In 2029, Italy would still be slightly above the United States, 136.7% versus 135.5%; in 2030, the United States would rise to 138.9%, while Italy would fall to 136.3%. The projected “overtaking” would therefore occur between 2029 and 2030 in the IMF baseline, and in 2031 the gap would become around six percentage points of GDP , with the United States at 142.1% and Italy at 136.1%.

From a strictly statistical perspective, therefore, the claim has a very solid basis. But the key word is projection . These numbers are not observed data: they presuppose specific fiscal policies, growth rates, interest rates, inflation, and the absence of shocks large enough to alter the trajectory. The IMF itself emphasizes in its Fiscal Monitor 2026 that global debt has entered a phase of severe pressure and that the United States is running public deficits in the order of 7-8% of GDP despite an economy close to full capacity, without a consolidation strategy sufficient to stabilize the debt-to-GDP ratio in the baseline.

Furthermore, the comparison remains incomplete if we conclude that Italy would automatically be "safer" than the United States once its debt-to-GDP ratio falls below Washington's. The United States issues debt in its own currency, controls a sovereign central bank, and has the deepest government bond market in the world; the dollar continues to play a central role in the international monetary and financial system. Italy, while benefiting from membership in the euro and the ECB's monetary architecture, does not independently control the issuance of the currency in which its debt is denominated. Therefore, the same debt-to-GDP ratio does not produce the same financial risk.

Furthermore, Italy's debt presents an interest rate dynamic that precludes complacency. The IMF estimates that, despite a debt-to-GDP ratio gradually stabilizing after 2027, the debt service burden remains high and that Italy remains vulnerable to growth and interest rate shocks; this explains why the Fund recommends faster consolidation and a more decisive reduction in the debt stock.

However, it's equally wrong to completely downplay the comparison. If the IMF baseline were to materialize, the fact that the United States would move from around 124% to over 142% of GDP while Italy stabilized its debt at around 136% would mean that Italy's relative fiscal position would significantly improve compared to Washington , especially since Rome would maintain positive primary balances while the United States would continue to run large primary deficits. The comparison is therefore valuable as an indicator of the divergence of fiscal trajectories, not as an absolute measure of solvency.

Verdict: True as an IMF forecast, not as a fact; the crossover is expected around 2030, not simply "in 2031." The thesis is statistically defensible if explicitly characterized as a projection of general government gross debt and not transformed into the conclusion that Italy and the United States have the same sovereign risk profile.

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Consolidated evaluation of the five claims

Claim	Documentary confirmation	Assessment
GDP per capita better than the G7 except for the USA	Compatible with specific real cumulative windows; the result depends on the period and demographics	Substantially true but easily overinterpreted
Italy's exports to Japan	WTO 2025: Giappone $738 billion , Italy $726 billion	Not true for year 2025; possible for 2025-26 rolling windows; 2026 annually not yet observable
Employment/unemployment	24.37 million employed; 5.8% unemployment in July 2026; 67.6% employment rate in EU 20-64 in 2025	A real and significant improvement, but Italy is still last in the EU in terms of employment.
Italy pays less than France	ECB May 2026: Italy 3.84% , France 3.74%	Extraordinary convergence; inversion possible only occasionally, not yet structural
US debt above Italy	IMF 2031: USA 142.1% , Italy 136.1%	True in the IMF baseline, but forecast; crossover already expected around 2030

The overall diagnosis is therefore more complex than the "five overtakings" message: three of the five messages are based on genuinely favorable economic developments for Italy—employment, relative fiscal position, and the compression of the sovereign premium—while the others depend much more on statistical definitions, time frames, currency exchange rates, and the deteriorating performance of the comparison countries . The narrative is therefore not built on invented data, but selects variables in which Italy appears relatively strong without simultaneously highlighting the metrics that limit its interpretation, particularly productivity, real wages, labor force participation, industrial production, and potential growth. It is on these variables, and not on isolated rankings, that the final assessment of the true strength of the Italian economy must be based.

II. The part of the economy that the “overtakings” do not measure

The analysis of the five "overtakings" changes substantially when we abandon the logic of the ranking and look at the variables that determine an economy's ability to generate income, wages, investments, and tax base in the medium to long term. The picture that emerges for Italy as of September 2026 is more complex than that portrayed by both the celebratory and the declinist narratives: the country exhibits greater macroeconomic resilience against many of the shocks of the last five years, a significantly stronger labor market, a competitive export system, and a recovery in investment , but it continues to be constrained by a combination of structurally weak productivity, incompletely recovered real wages, essentially stagnant industry, insufficient accumulation of technological capital, low research intensity, heavy energy dependence on foreign countries, unfavorable demographics, and profound regional disparities . It is precisely for this reason that the International Monetary Fund, while acknowledging the solidity of employment, fiscal progress, and the implementation of the PNRR, continues to estimate potential Italian growth of just 0.6-0.7% per year over the medium term. IMF — Italy: 2026 Article IV Consultation

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6. Productivity: it is here, more than in the GDP rankings, that the real Italian problem is measured

Productivity represents the main point of structural fragility in the Italian economy, because it determines how much additional output can be generated by a given amount of labor and capital and, consequently, how rapidly real wages, profits, tax revenues, and living standards can grow over time without depending on a continued increase in hours worked. The OECD notes that Italian labor productivity growth has remained below the euro area average since the mid-1990s and has essentially stagnated after 2010 , with a temporary acceleration only between 2019 and 2022; even more significantly, the level of multifactor productivity has declined between 2000 and 2022. The OECD also highlights that over the last decade, a significant share of Italian growth has come from increasing hours worked, a mechanism that is becoming progressively less replicable in a country whose working-age population is declining. OECD Economic Surveys: Italy 2026 — Enhancing business dynamism to raise productivity

ISTAT data allow us to quantify the problem over a longer time horizon. In the decade from 2015 to 2025, the cumulative contribution of total factor productivity to economic growth was just 0.6 percentage points , while capital intensity did not provide a significant boost to labor productivity in the long run, with the exception of investment in ICT capital. This means that a very significant portion of Italy's recent economic expansion has resulted from increased labor input or the recovery of activity after previous shocks, not from a permanent acceleration in the efficiency with which capital and labor are combined. The same ISTAT analysis notes that the key is not simply "investing more," but changing the quality of investment in intellectual property, digitalization, technology, and human capital. ISTAT — Annual Report 2026, Productivity and Investment

The International Monetary Fund's projections highlight the gap between improved employment and the productivity leap that would be necessary to structurally change the growth path. In the macroeconomic table for Article IV 2026, the IMF estimates productivity in industry, including construction, at +1.3% in 2025, +0.4% in 2026, +0.7% in 2027, and approximately +0.5% annually from 2028 to 2031. At the same time, potential GDP is estimated at around 0.7% until 2029 and 0.6% in 2030-2031 . These figures are incompatible with a reading according to which Italy has entered a new phase of structural growth comparable to the most dynamic advanced economies: instead, they describe a country that has acquired greater stability but has not yet broken its cycle of low productivity, low growth, and small-sized firms . IMF — Italy 2026 Article IV Staff Report

The Fund identifies with remarkable precision the mechanisms that fuel this trap: the predominance of small and mature firms, insufficient managerial and technical skills, limited venture capital, difficulties in expanding the size of the most productive firms, fragmented capital markets, volatile incentives, and a wage gap compared to competing countries, which facilitates the emigration of skilled workers. The key point is that Italy does not simply suffer from "too many SMEs," but from the fact that some of the most productive firms are not growing sufficiently , while the economy retains a long tail of companies with limited capitalization and modest capacity for investment in research, software, training, and automation. OECD — Productivity growth has been weak

Assessment: Of the five "overtakings," productivity introduces the most severe corrective. Italy is now more employed and financially more credible than a few years ago, but it is still not significantly more efficient. Until productivity per hour worked and multifactor productivity sustainably accelerate, rising employment may support GDP in the short term but is unlikely to produce a rapid and sustained increase in real per capita income.

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7. Real wages: more employed, but the purchasing power lost in the inflation shock has not yet been recovered

The second major element missing from the overtaking narrative concerns wages. Between 2021 and 2024, Italy experienced an inflationary shock far greater than the immediate adjustment capacity of contractual wages, and the subsequent recovery has remained incomplete. The OECD Employment Outlook 2026 notes that in the first quarter of 2026, Italian real wages increased by 1.3% compared to a year earlier , benefiting from the previous moderation in inflation, but still remained 6.1% below the level of the first quarter of 2021 , the widest gap observed among the major OECD economies. OECD — Employment Outlook 2026: Italy

The measurement of contractual wages leads to an even more stark conclusion. The OECD estimates that nominal wages under collective agreements increased by 3.1% in 2025, the same increase as in 2024, but that in real terms, contractual wages were still 8.8% lower than the level of January 2021. This helps explain one of the apparent contradictions of the current phase: the economy may be experiencing more employment, less unemployment, and even higher aggregate household income, while the individual worker continues to have a lower real wage than before the price shock. OECD Economic Surveys: Italy 2026 — Maintaining the reform momentum

The deterioration cannot even be considered definitively over. The OECD, incorporating the new acceleration in energy costs linked to Middle Eastern tensions in its June-July 2026 forecast, estimates that Italian real wages could decrease by 0.9% in 2026 , before increasing by just 0.2% in 2027. This is also due to the relatively limited number of contract renewals expected for that year and a labor market that, despite starting from record levels of employment, is showing a deceleration in new job creation. OECD Economic Outlook 2026 — Italy

This data profoundly changes the assessment of "overtaking": the increase in per capita GDP, record employment, and improved sovereign risk have not yet translated into an equivalent recovery in real wages. This doesn't mean that households' economic conditions have necessarily worsened—because the number of employed people per household, transfers, and taxes impact disposable income—but it does mean that it 's incorrect to use nominal per capita GDP or the number of employed people as an automatic proxy for the average worker's purchasing power .

Assessment: Employment has improved more rapidly than wages. This divergence is one of the main reasons why Italy's macroeconomic strengthening is not being felt with the same intensity by households and represents one of the crucial tests for determining whether the current phase can transform from a quantitative recovery in employment into a qualitative improvement in living standards.

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8. Industrial production: strong exports, but the manufacturing base is not experiencing a comparable expansion

Industry probably represents the greatest contradiction in the contemporary Italian economy. On the one hand, the country maintains an extraordinary export capacity and a very strong international position in numerous manufacturing niches; on the other, the physical quantity of industrial production does not show a trend consistent with the image of a booming manufacturing economy. The most recent data available at the time of this report is that published by ISTAT on September 10, 2026 : in July, the seasonally adjusted index of industrial production increased by 0.7% compared to June , but the average for May-July decreased by 0.1% compared to the previous three months and, adjusted for calendar effects, was unchanged compared to July 2025. ISTAT — Industrial Production, July 2026

The composition of the data also suggests caution. In July 2026, production increased quarterly by 2.1% in consumer goods , by 0.5% in intermediate goods , and by 0.2% in capital goods , while energy fell by 0.9%; however, on an annual basis, the production of consumer goods decreased by 1.2% , that of intermediate goods by 0.8% , and that of capital goods by 0.1% , while only energy increased significantly, by 6.4%. Among the manufacturing sectors, strong differences emerge: pharmaceuticals +7.4% , computers-electronics-optics +2.4%, compared to chemicals -3.4% , electrical equipment -2.8%, and other manufacturing/repair industries -4.6%.

The previous quarter had shown the same volatility: in June 2026, production had decreased by 1.0% compared to the previous month and by 0.6% on an annual basis , while in the second quarter, industrial value added decreased by 0.5% compared to the previous quarter , despite overall GDP growing by 0.2%, driven mainly by services. Italy is therefore experiencing a phase in which aggregate growth and employment can improve without a corresponding general expansion in manufacturing. ISTAT — Quarterly Economic Accounts, Second Quarter 2026

This apparent anomaly is not incompatible with excellent export performance. The monetary value of exports can grow while production volumes stagnate if the average price of exported products increases, if the sector mix and specialization toward higher-value goods improve, if the most competitive firms gain markets while those oriented toward the domestic market suffer, or if very strong sectors—pharmaceuticals, aerospace, nautical engineering, specialized mechanics—compensate for the decline of larger or more energy-intensive sectors. The strength of exports and the stagnation of industrial production are therefore not statistically incompatible: they describe a manufacturing system that is highly competitive at its peak, but not uniformly dynamic at its production base .

Assessment: Italy's industrial capacity remains one of the country's key assets, but the 2025-2026 data do not yet depict a new phase of industrial expansion. The correct data to consider is not just the value of exports, but the combination of volumes, production, investments, value added, and productivity.

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9. Investments: the PNRR has reopened the capital cycle, but the challenge is to transform temporary spending into permanent productive capacity

Investment is one of the areas where the Italian situation has improved the most compared to the stagnation of the decade following the financial crisis. The IMF estimates that gross fixed investment will have increased by 3.5% in 2025 and forecasts a further +2.3% in 2026 , before decelerating to 1.0% in 2027 and to rates below 1% in subsequent years. ISTAT also reports a quarterly increase in investment of 0.3% in the second quarter of 2026 , following the +0.7% increase in the first quarter. ISTAT — Quarterly Economic Accounts, Second Quarter 2026

Public investment has also accelerated significantly: ISTAT (Italian National Institute of Statistics) projects a 9.6% increase for 2025 , explicitly linked to the use of PNRR resources. This trend represents progress compared to years in which Italian public investment was constrained by the need for fiscal consolidation and low administrative capacity. Infrastructure, digitalization of public administration, networks, construction, and investments related to the energy transition are providing a significant boost to demand and, if properly selected, can also increase future production capacity. ISTAT — Annual Report 2026

The problem is that Italy continues to start from a relatively weak capital stock. The OECD notes that capital stock growth has been close to zero on average since 2008 , far below even the modest rates recorded in other major EU economies; between 2019 and 2025, the stock began to grow again, but at a slower rate than employment, resulting in a reduction in capital per worker. Even in Italy's most productive regions, the ratio of gross fixed investment to value added has historically remained lower than the French and German averages.

This makes the PNRR both an opportunity and an interpretative risk. If the works, digitalization, infrastructure, and public investments financed by the program increase the return on private capital, reduce administrative time, and stimulate independent business investment, the effect on potential growth could outlast the end of European transfers. However, if the impetus remains predominantly linked to construction, public spending, and temporary incentives, the contribution to growth could rapidly diminish after the Plan's completion. The OECD and the IMF agree precisely on this point: the economic value of the PNRR depends not only on the percentage of resources spent, but on the capacity of reforms and investments to alter future productivity. OECD — OECD Economic Studies: Italy 2026

Assessment: Investments represent a real improvement in the Italian economy, but the real test will begin when the extraordinary stimulus from the PNRR wanes. The crucial question is whether Italy has rebuilt an endogenous process of private, technological, and human capital accumulation.

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10. Demography: The stability of the population hides a very rapid deterioration of the age structure

Demographic data is probably the most predictable constraint and, at the same time, the least visible in the five "overtakings." As of January 1, 2026, Italy had 58,943,000 residents , essentially unchanged from a year earlier, but this apparent stability derives almost entirely from immigration: in 2025, there were 355,000 births compared to 652,000 deaths , while 440,000 people immigrated from abroad and 144,000 emigrated, generating a positive migration balance of approximately 296,000 units that almost entirely offset the strongly negative natural balance. ISTAT — Demographic indicators, year 2025

Fertility fell to 1.14 children per woman in 2025, a record low , while the average age of the population reached 47.1 years at the beginning of 2026. People over 65 now number 14.821 million , equal to 25.1% of the population , while those under 15 number only 6.852 million, or 11.6%; the population aged 15-64 has fallen to 37.270 million , 73,000 fewer in just one year. In ten years, according to the ISTAT Annual Report, the population aged 0-14 has decreased by 16.7% , while the population aged over 90 has increased by 34.6%. ISTAT — Annual Report 2026, demographic picture

The macroeconomic consequence is not simply an increase in pension spending. A smaller working population means fewer potential workers, greater competition for skills, a greater burden of healthcare and social security expenditures on the tax base, lower potential demand in some domestic markets, and a greater need to increase the productivity of each worker. The IMF, in fact, identifies rapid aging, along with weak productivity, as one of the two main reasons why Italy's potential growth remains at around 0.6% per year .

Territorial dynamics further exacerbate the problem. In 2025, the population of the North increased by 2.2 per thousand , that of the Center remained essentially stable, while the South lost 3.1 per thousand of its population; Lombardy, Emilia-Romagna, and Trentino-Alto Adige continue to record increases, while large parts of the South continue to experience a negative natural balance, youth emigration, and reduced migratory attractiveness.

Assessment: Demography constitutes a structural brake on a larger scale than most economic fluctuations. Without a significant increase in female and youth participation, cost-effective management of immigration, and above all, an acceleration of productivity, the current improvement in employment risks gradually turning into labor shortages rather than increased productive capacity.

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11. Innovation: Digitalization is accelerating, but research spending is still too low to support a leap in productivity

Italy is rapidly improving its adoption of some digital technologies, but continues to invest little in the original generation of knowledge compared to its main European competitors. ISTAT estimates total intramural research and development spending of €29.4 billion for 2023 , a nominal increase of 7.7% compared to 2022, but R&D intensity remained stable at 1.37% of GDP , virtually unchanged from 2022 and lower than in 2021. The business component represented only 0.80% of GDP . ISTAT — Research and development in Italy, 2023-2025

The European comparison is stark: ISTAT indicates an Italian intensity of around 1.4% of GDP , compared to 3.1% in Germany , 2.2% in France , and 1.5% in Spain; Eurostat estimates total EU R&D spending in 2024 of €403.1 billion , equivalent to 2.2% of GDP , with Sweden at 3.6%, Belgium at 3.4%, Austria at 3.3%, Finland at 3.2%, and Germany at 3.1%. Eurostat — EU spending on R&D exceeded €403 billion in 2024

The structure of private research in Italy confirms a concentration problem. In 2023, large companies accounted for approximately €12.5 billion , equal to 73.1% of private R&D , while over 83% of all corporate R&D spending came from Italian or foreign multinational groups; foreign-controlled multinationals alone accounted for 44.6%. Small businesses, however, reduced their spending by 2.3% in the same year.

On the technology adoption front, the picture is more encouraging but still lags behind the European frontier. Eurostat estimates that in 2025, approximately 16.5% of Italian companies with at least ten employees would use at least one artificial intelligence technology , compared to an EU average of 20% . Germany was around 26%, France around 18%, while Denmark, Finland, and Sweden were around or above 35-40%, respectively. Eurostat — The use of artificial intelligence technologies in the European Union, 2026 edition

Technology diffusion, however, is highly segmented by company size, human capital, and sector. ISTAT notes that nearly 70% of SMEs had access to cloud services in 2025 , but that digitalization, research, and innovation are significantly greater in larger companies, in technologically advanced sectors, and in companies with a higher share of graduates and specialists; human capital is one of the variables statistically most closely associated with innovative dynamism.

Assessment: Italy is not technologically stagnant, but it remains an economy in which digital adoption is advancing faster than its own capacity to produce research, technological capital, and innovation on a large scale. This is a crucial distinction: adopting technologies increases efficiency, but structurally changing the production frontier also requires research, scale-ups, patents, venture capital, and advanced human capital.

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12. Energy: a strategic vulnerability that directly affects industrial competitiveness

Energy dependence is one of the main reasons why geopolitical shocks relatively distant from the national territory can quickly affect inflation, industrial margins, consumption, and Italian growth. The IMF estimates that over 70% of Italian energy consumption is generated through imported fossil fuels , compared to just over 60% in the euro area, and explicitly identifies this characteristic as one of the main channels through which the new phase of energy tension in 2026 is slowing growth. IMF — Italy 2026 Article IV Consultation

The mechanism is already visible in industrial prices. In July 2026, Italian industrial producer prices increased by 2.4% in a single month and by 7.8% compared to July 2025 ; on the domestic market, the annual increase was as high as 9.3% , but drops to 3.3% if the energy sector is excluded , highlighting how the energy component is altering the cost picture. In the same month, refined petroleum products recorded producer price increases of over 50% on the domestic market. ISTAT — Industrial Producer Prices, July 2026

The OECD considers energy exposure one of the main reasons why growth in 2026 could stagnate at 0.5% : rising energy prices simultaneously hit household consumption, investment, and manufacturing exports, offsetting part of the stimulus provided by the NRRP. The organization therefore considers investments in renewable generation, networks, storage, and European interconnections a priority, not only as a climate policy but as a tool for competitiveness and economic security. OECD — Italy Economic Snapshot, June 2026

Assessment: Italy has significantly diversified its energy sources since 2022, but has not eliminated the structural vulnerability resulting from the burden of imported fossil fuels. For a manufacturing economy, this limitation directly impacts the marginal cost of production and the ability to compete with countries with structurally less expensive energy.

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13. Disposable income: households are recovering, but the improvement does not coincide with that of real wages

Disposable income is the point at which an exclusively negative reading of wages would itself risk becoming incomplete. The OECD notes that the simultaneous increase in employment and nominal wages has pushed per capita household income to its highest levels in the last fifteen years , while changes to tax credits, social contributions, and protection tools have supported lower-income earners in particular.

This dynamic explains why three seemingly contradictory factors can coexist: real wages still lower than in 2021, employment at an all-time high, and overall higher family income. If the number of employed members increases, the family wage bill grows even without fully recovering individual real wages; at the same time, public transfers and reductions in some contribution components can increase net disposable income. Improvements in economic welfare must therefore be measured with a set of indicators, not a single wage series.

Social data show moderate progress but not a turning point. In 2025, 22.6% of the Italian population was still at risk of poverty or social exclusion , down from 23.1% in 2024; the share at risk of poverty remained essentially stable at 18.6% , while that of people in low-work-intensity households fell from 9.2% to 8.2%. At the same time, severe material and social deprivation increased from 4.6% to 5.2% , a sign that prevents the average improvement from being interpreted as uniformly distributed. ISTAT — Living conditions and household income, 2024-2025

Assessment: Italian households cannot be accurately described as either uniformly impoverished or fully benefiting from the macroeconomic improvement. Disposable income is supported by rising employment, but the decline in real wages and the persistence of large pockets of poverty indicate that the recovery in living standards remains incomplete.

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14. Southern Italy: the South is growing more rapidly, but the economic data does not yet equate to structural convergence

One of the most interesting findings for 2025 is that Southern Italy was not the main obstacle to national growth. According to ISTAT's preliminary regional estimate, real GDP in Southern Italy increased by 0.6% in 2025 , slightly more than the 0.5% recorded in the Northwest, Northeast, and Center . Employment growth was even more significant, with +1.5% in Southern Italy , compared to +1.1% in Center, +0.9% in the Northwest, and +0.8% in the Northeast. ISTAT — Preliminary estimate of GDP and territorial employment, year 2025

This result is important because it indicates that in recent years, Southern Italy's growth has significantly benefited from construction, public investment, the National Recovery and Resilience Plan (NRRP), increased employment, and the post-pandemic recovery. However, it should not be confused with a structural convergence already achieved. ISTAT itself warns that the 2025 regional data are preliminary estimates subject to revision , based on still incomplete information. Furthermore, differentials of a few dozen basis points in annual growth are insufficient to bridge gaps accumulated over decades in GDP per capita, female participation, infrastructure, education, and productivity.

Demographics also show a trend opposite to convergence: while the North gains population, the South loses 3.1 per thousand of its residents annually. The emigration of young people and graduates has a greater macroeconomic cost than reflected in current GDP, because it strips the region of precisely the human capital that should support entrepreneurship, innovation, and the future tax base.

The geography of research confirms its fragility. Although regions such as Sicily, Calabria, and Molise recorded strong growth rates in R&D spending in 2023, Southern Italy as a whole remains below the national average in terms of research intensity , and the private component of R&D remains significantly lower than in the industrial regions of Central and Northern Italy; in many Southern regions, the bulk of research depends on the public sector and universities rather than businesses.

Assessment: The South is experiencing an economic upswing, and this fact must be acknowledged without reservation; however, the difference between faster growth for a few years and structural convergence remains enormous. The test will be whether the improvement persists beyond the extraordinary cycle of public investments and whether it translates into more private capital, innovative businesses, female employment, and the retention of skilled young people.

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15. Potential growth: Italy's real limit remains around 0.6-0.7%

All the weaknesses examined so far converge into a single variable: potential growth , that is, the rate at which the economy can expand in the medium term without generating inflationary imbalances and without depending on temporary stimuli. The IMF estimates Italy's potential growth at 0.7% in 2024, 2025, 2026, and 2027 , a further 0.7% in 2028-2029, and around 0.6% in 2030-2031 .

This is probably the single most important statistic in the entire report, because it allows us to correctly interpret all the "overtakings." An economy with record employment, a compressed spread, very strong exports, and a primary surplus can simultaneously be an economy with a structural growth capacity of less than 1% per year. There is no contradiction: the primary indicators measure relative strength, sectoral competitiveness, and labor utilization; potential growth, on the other hand, measures the ability to expand the production frontier over time through the working population, capital, and productivity.

The problem becomes even more acute when debt exceeds 130% of GDP. If nominal GDP grows slowly, a much larger share of debt adjustment must come from primary surpluses; however, if productivity and potential were to increase by an additional percentage point permanently, the debt denominator, tax revenues, wages, and pension sustainability would simultaneously improve. For this reason, the IMF and OECD treat productivity reforms not as a secondary microeconomic issue, but as an integral part of Italy's fiscal strategy. OECD — OECD Economic Studies: Italy 2026

The NRRP can alter this trajectory, but not automatically. Reforms in the justice system, competition, public administration, education, and digitalization, along with infrastructure investments, can increase total factor productivity and returns on private capital; however, the IMF explicitly warns that delays or inefficient implementation of investments would reduce growth and fiscal stability, while greater productivity gains from digitalization, AI, and European integration would constitute the main structural upside.

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Balance of the part that the "five overtakings" do not show

Structural variable	Most recent evidence	Diagnosis
Productivity	IMF: approximately +0.4% in 2026 ; potential 0.6-0.7%	Central structural weakness
Real wages	-6,1% vs Q1 2021	Incomplete recovery
Industrial production	0.0% y/y July 2026	Stagnation with strong sectoral heterogeneity
Investments	FMI +3,5% 2025; +2,3% 2026	Area for improvement, strongly supported by the PNRR
Demographics	fertility 1.14 , 25.1% over-65	Increasing structural constraint
R&S	1.37% of GDP	Far below Germany and the EU average
AI in business	about 16.5% , EU 20%	Growing adoption, gap still present
Energy	> 70% of energy consumption from imported fossil fuels according to IMF	High geopolitical exposure
Risk of poverty/exclusion	22.6% of the population	Limited improvement
GDP of Southern Italy	+0.6% in 2025 , higher than the Centre-North	Significant recovery, convergence not yet achieved
Potential growth	0,6-0,7%	Main long-term macroeconomic constraint

The judgment that emerges

The part of the economy that the five "overtakings" don't measure profoundly changes, but it doesn't simply overturn, Italy's assessment. The improvement in recent years is real , because more people are working, investment has recovered, the public budget has regained credibility, the export system continues to demonstrate exceptional competitiveness, and some regions in Southern Italy are growing faster than Central and Northern Italy. Denying these elements would be methodologically incorrect, as would turning them into evidence of an economic miracle.

The problem is that Italy appears to have become, first and foremost, a more resilient economy , not yet a structurally faster one. Productivity continues to grow too slowly; the purchasing power of wages lost during inflation has not been recovered; industry has not yet regained an expansionary cycle; research remains far from the German and European frontiers; capital per worker is low; the energy transition has not yet eliminated a very high dependence on fossil fuel imports; and an increasingly aging population is progressively reducing the amount of available labor.

It is therefore possible to draw a preliminary institutional conclusion: Italy in 2026 has a relatively better macrofinancial position than its reputation implied during the sovereign debt crisis, but the transformation has not yet reached the structural core of the economy—productivity, innovation, demography, and potential growth—which would determine a genuine change in economic regime . The five overtakings document a change in relative position; they do not yet demonstrate that the country has built a model capable of sustaining significantly higher real per capita growth, wages, and productivity for a decade.

III. The structural judgment

16. Since 2022, Italy has truly improved, but not all improvements have the same origin nor the same probability of lasting.

The crucial question, after examining the five "overtakings" and analyzing what they fail to demonstrate, is no longer whether Italy has performed better than in the past—on this point, the available documentation allows for a positive answer—but what share of that improvement derives from internal transformations of the Italian economy, what share from the weakness of competing countries, what share from cyclical or extraordinary factors, and what share can be considered sufficiently structural to survive the progressive extinction of the PNRR stimulus, the aging of the population, and a normalization of the employment cycle . It is on this ground that the "overtakings" narrative must be subjected to the most severe test, because a relative position can improve for four very different reasons: the country can become more productive; it can better utilize previously idle resources; it can temporarily benefit from transfers, incentives, or favorable external conditions; or it can simply lose less ground than others. The Italian picture from 2022 contains all four of these elements, and their weight varies radically from indicator to indicator. The International Monetary Fund describes an economy that has shown resilience, fiscal consolidation, employment at historically high levels and sovereign spreads that have fallen to multi-year lows , but continues to define growth as "modest" and to estimate that medium-term potential remains around 0.6% , held back by weak productivity and rapid aging.

A first distinction must concern what has actually changed within Italy . The improvement in the labor market cannot be dismissed as simply reflecting the deterioration elsewhere: the increase in employment, the greater share of permanent contracts, the decline in unemployment, and the increase in adult participation are observable domestic phenomena, even if a significant portion of employment growth is concentrated among older workers and in relatively low-productivity sectors. The OECD notes that in the two years to the fourth quarter of 2025, Italian employment increased by 1.7% , outpacing real GDP growth in the same period. It also emphasizes that a significant portion of the increase occurred through permanent contracts and that the share of temporary contracts fell to 13% , a fifteen-year low. At the same time, it points out that many new jobs were created in tourism, consumer-oriented services, and construction, sectors that do not necessarily generate the same productivity and wage levels as capital-intensive technology or manufacturing sectors. OECD Economic Surveys: Italy 2026

The second genuinely domestic improvement concerns the relative fiscal position. The IMF explicitly attributes the strengthening of market confidence and the reduction of Italian spreads to multi-year lows reached before the new geopolitical tensions of 2026 to the continued fiscal consolidation ; this result is therefore not simply due to France's deterioration, even if the French deterioration has greatly amplified convergence. The difference is substantial: Italy has improved its relative profile because it has reduced its deficit, rebuilt a primary surplus, and maintained a fiscal trajectory credible enough to mitigate the risk premium demanded by investors. Meanwhile, France has simultaneously recorded a public deficit of 5.1% of GDP in 2025 , a debt ratio of 115.7% , projected by the IMF at 118.5% in 2026 and above 120% thereafter, with political difficulties in approving the originally planned consolidation. IMF — Italy: Staff Concluding Statement of the 2026 Article IV Mission IMF Executive Board Concludes 2026 Article IV Consultation with France

It follows that the Italy-France differential must be read as the sum of two movements , not as a simple promotion of Italy: Rome has improved its fiscal and stability profile, while Paris has lost part of the historic advantage deriving from its greater budget credibility. The IMF's own analysis on France records that the deficit, although reduced compared to 2024, would remain at 5.2% of GDP in 2026 , the primary balance at -2.7% , and the debt would rise to 121.1% in 2028 ; the Fund also attributes part of the difficulties in achieving the planned consolidation to political fragmentation and warns that, without further measures, France would not be able to achieve the fiscal targets initially planned. IMF — France 2026 Article IV Consultation IMF — France: Staff Concluding Statement of the 2026 Article IV Mission

17. Germany explains a significant part of the relative “overtaking”: Italy has improved, but Berlin has gone through an exceptional industrial shock

The comparison with Germany is equally instructive because it shows how a ranking can shift when a competitor experiences a historically anomalous phase. The IMF clearly reconstructs the German sequence: the Russian gas disruption in 2022, the energy price shock, the rapid monetary tightening needed to reduce inflation, weak productivity, growing international competition in industry, and renewed trade tensions have contributed to two consecutive years of real GDP contraction in 2023 and 2024 , while the subsequent recovery has initially remained weak. IMF Executive Board Concludes 2025 Article IV Consultation with Germany

This means that a significant part of Italy's improved relative performance since 2022 does not stem from an acceleration of Italy's growth toward high rates, but from the fact that Germany has temporarily ceased to function as Europe's traditional industrial engine . The distinction is essential. If Italy grows by 0.5-0.8% while Germany stagnates or contracts, Italy's relative position improves; but this does not mean that the Italian productive system has suddenly acquired a dynamic comparable to that of the most productive world economies. Indeed, the IMF estimates a recovery for Germany of around 1% in 2026 and 1.5% in 2027 thanks to increased public spending, investment, and easing monetary conditions, while continuing to point to structural constraints resulting from aging and productivity. IMF — Germany: Staff Concluding Statement of the 2025 Article IV Mission

For Italy, therefore, Germany's deterioration had a dual effect. On the one hand, it improved its relative ranking in terms of growth and GDP per capita; on the other, it posed a risk, because Germany is one of the main export markets and a central hub in the value chains in which Italian manufacturing participates. An Italy that "overtakes" Germany because the latter is weakening may gain a relative reputational advantage but not necessarily a net macroeconomic advantage, since a weaker Germany reduces foreign demand, intermediate orders, and opportunities for Italian subcontracting. It is precisely this type of discrepancy between political ranking and national economic interest that renders the overtaking narrative insufficient.

18. France, Germany, the United Kingdom and Japan: Italy benefited from a period in which almost all the major European comparators experienced specific problems

Italy's position from 2022 onwards must be placed within a broader context of relative European weakness. France has maintained higher growth than Italy for several years but has seen its fiscal situation drastically worsen; Germany has suffered a genuine industrial recession; the United Kingdom has maintained higher aggregate growth rates but has experienced persistent inflation, low productivity, and severe pressure on real incomes; Japan has been affected by the yen's weakness against international dollar-denominated currencies, a particularly relevant factor for its export ranking. The IMF, in its Article IV 2026 for the United Kingdom, estimates British growth of 1.0% in 2026 , still above Italy's pace, but notes that the 2026 energy shock has significantly reduced short-term prospects and maintained significant inflationary pressures. IMF Executive Board Concludes 2026 Article IV Consultation with United Kingdom

The correct conclusion is therefore not that Italy has benefited solely from the weakness of others, but that Italy's relative improvement has been amplified by an exceptionally unfavorable period for some of the traditional European benchmarks . This is especially true for comparisons with Germany and France, less so for the United States and the United Kingdom, which have maintained higher aggregate GDP growth. In the case of Japan, the role of the exchange rate makes the export comparison even more dependent on nominal metrics. It is therefore appropriate to classify the contribution of competitors' weakness as very high in the Italy-France sovereign risk comparison, high in the growth comparison with Germany, significant but not dominant in the G7 GDP per capita ranking, and important in the export ranking with Japan .

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19. The role of the cycle: an important part of employment success is real, but it also arises from an exceptional post-pandemic restructuring

Another part of Italy's improvement since 2022 is cyclical or semi-cyclical and should be distinguished from structural reforms. The post-pandemic period was characterized by a strong replenishment of employment in services, the return of tourism flows, the recovery of construction, and exceptionally high public support, first through national measures and subsequently through the PNRR. The OECD explicitly notes that a significant portion of the employment increase occurred in consumer-related services, tourism, and construction , while real output grew less rapidly than employment. This means that additional employment had a positive effect on income and inclusion, but simultaneously contributed to a reduction in average apparent labor productivity, as the number of employed people increased faster than value added. OECD Economic Surveys: Italy 2026

The growth in employment among the over-50s is another structural factor, but it cannot be entirely attributed to the current government's policies. The OECD notes that a significant portion of the increase in employment is concentrated among older age groups and also links this phenomenon to pension reforms that have progressively raised the effective retirement age, which will rise to 64.8 years in 2024. This result is economically positive because it expands the labor supply and reduces the ratio of retired people to employed people in the short term, but it cannot be entirely attributed to the choices made since 2022 and cannot be repeated indefinitely: once high levels of participation among older age groups are achieved, further gains require increased female and youth employment, regular immigration, and above all, increased productivity. OECD Economic Surveys: Italy 2026

A careful distinction must therefore be made between the level of employment , which is structurally better than in the past, and the future rate of employment growth , which likely cannot remain as high given a shrinking population. The OECD estimates that the Italian working-age population could decline by approximately 5 million people by 2040 compared to 2025 , and by over a third by 2060 in the ISTAT median demographic scenario. OECD Economic Surveys: Italy 2026 — Engaging youth in the labor market amid population aging

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20. The PNRR: the greatest extraordinary factor of Italian growth and, at the same time, the most important test of its sustainability

No serious assessment of the 2022-2026 period can ignore the National Recovery and Resilience Plan , because it simultaneously constitutes a source of aggregate demand, an extraordinary public investment program, and a vehicle for institutional reforms. The IMF explicitly attributes part of the support for GDP growth in 2025 to the NRRP and indicates that growth in 2026 benefits from the peak in investments linked to the Plan ; the same growth forecast of 0.5% in 2026 and 2027 continues to incorporate the contribution of the implementation of residual investments. IMF — Italy 2026 Article IV Consultation

This means that part of the current level of investment, construction activity, employment, and domestic demand does not yet represent a fully autonomous economic equilibrium. The point is not to argue that the NRRP produces "artificial" growth: EU-funded public investment is real economic activity and, if it increases infrastructure capital and productivity, can generate permanent effects. The analytical problem is different: the flow stimulus is temporary, while the structural benefit depends on the capital stock and reforms that remain after the end of the program . If €1 billion in public investment only generates demand during the construction phase, its effect on GDP diminishes once the project is completed; if, on the other hand, it reduces logistics times, administrative costs, school dropouts, congestion, judicial processing times, or digital costs, it can increase potential output for many years.

This distinction becomes urgent as the European Recovery Facility enters its final phase. The European Commission has established that Member States must complete the milestones and targets by 2026 and that the final request for payment must be submitted by 30 September 2026 , with disbursements by 31 December; the Commission explicitly warns that the evaluation window will be extremely short and that the lack of sufficient evidence of achievement of the objectives may lead to the decommitment of funds. European Commission — RRF implementation towards 2026

The Commission had already emphasized in its assessment of Italy that, in order to meet its commitments by August 2026, it was necessary to accelerate reforms and investments, strengthen administrative capacity, especially at the local level, and promptly identify any delays . This observation is crucial because it demonstrates that post-NRRP sustainability will not depend solely on the nominal amount of funds absorbed, but on the public administration's ability to transform the extraordinary implementation method into ordinary capacity. European Commission — 2025 European Semester country recommendation for Italy

The OECD is particularly explicit on this point: it considers the PNRR reforms and investments responsible for advances in competition, justice, digitalization, public administration renewal, infrastructure, and education, but argues that the real permanent benefit will depend on the ability to maintain the best systems created to design, implement, and evaluate public policies after the Plan . OECD Economic Surveys: Italy 2026 — Executive summary

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21. What can survive the PNRR: infrastructure, justice, and administrative capacity yes; spending levels no.

The distinction between the transitory and permanent effects of the PNRR can be formulated operationally. The extraordinary level of spending cannot survive in its entirety , because the European program is by definition temporary; furthermore, the high contribution from construction or programs directly incentivized by European funds cannot be assumed to be permanent. However, completed physical infrastructure, energy networks, the digitalization of public administration, reduced judicial processing times, improved procurement procedures, competition reforms, technical training, school infrastructure, and administrative capacity can survive—and produce multiplier effects. This is the difference between a spending program and a program to increase productive capacity .

The IMF specifically considers post-NRRP continuity a key priority for Italy: it recommends incorporating the effective practices and tools developed during the implementation of the Plan into the medium-term structural budget plan and developing a subsequent reform agenda to prevent 2026 from being a point of discontinuity. The Fund also identifies digitalization, artificial intelligence, improved access to risk capital, increased competition, regulatory simplification, and integration into the European single market as the main ways the country could transform the legacy of the NRRP into greater productivity. IMF — Italy: Staff Concluding Statement of the 2026 Article IV Mission

The most severe test will therefore come between 2027 and 2030. If, after the peak in EU-funded investment ends, private investment continues to grow, productivity accelerates, and employment remains high without further extraordinary support, it will be possible to speak of a structural transformation. If, however, investment slows sharply, industrial production remains stagnant, and growth returns to around 0.5%, the period 2022-2026 will appear, in retrospect, more like a phase of financed resilience and post-crisis reorganization than a true regime shift.

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22. Demography: the constraint that will progressively replace the problem of unemployment with that of the shortage of workers

Demographic aging is the greatest obstacle to the ability to project employment performance of recent years linearly into the future. According to the OECD, in the ISTAT median scenario, the number of working-age people will decrease by around five million by 2040 compared to 2025 and by over a third by 2060; in a separate Employment Outlook projection, the Italian working-age population would decrease by 34% between 2023 and 2060 , while the number of elderly people per person of working age would increase from 0.41 to 0.76 , that is, from one elderly person for every 2.4 people of working age to approximately one elderly person for every 1.3. OECD Employment Outlook 2025 — Italy

The implications are profound. Italy will be able to continue increasing the absolute number of employed people only if it can offset the decline in the potentially active population through a strong increase in the employment rate, greater female participation, better integration of young people, longer working lives, and sufficiently large and skilled net immigration. This implies that the current low employment rate paradoxically also represents a reserve for growth: Italy still has a large pool of people who could enter the labor market. However, this reserve is finite and cannot compensate for demographic decline indefinitely.

The OECD offers a particularly stark quantification of the risk. Assuming that annual productivity growth remains at the Italian average rate for the period 2006-2019, equal to approximately -0.31% , the combined effect of aging and the reduction in the employment-to-population ratio alone would cause GDP per capita to decline by approximately 0.67% per year in the long-term scenario. Even a strong mobilization of unused labor resources—a reduction of at least two-thirds in the gender employment gap, increased employment of healthy older people, and regular migration—would only be sufficient to neutralize the demographic impact on per capita growth, not automatically generate robust expansion. OECD Employment Outlook 2025 — Italy

This is probably the most important quantitative conclusion of the entire report: labor policy can offset demographic decline, but it cannot replace productivity . If the number of potential workers declines, maintaining growth requires each worker to progressively produce more added value. Productivity is therefore not just one weakness among many: it will gradually become Italy's main macroeconomic constraint.

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23. An attribution test: what comes from Italy and what comes from the outside world

Institutional judgment requires avoiding the false precision of an arbitrary percentage—for example, "60% of the improvement is due to the government"—because there is no official causal decomposition capable of credibly attributing every macroeconomic variation to a single source. However, it is possible to qualitatively classify the main results using the most rigorous criterion allowed by the evidence.

Improvement observed	Domestic factor	Deterioration of competitors	Cycle/external	PNRR	Durability
Record occupancy	High	Low	Medium-high	Media	Medium-high , but held back by demographics
Lower unemployment	High	Low	Media	Media	Media
Permanent contracts	High	Irrelevant	Media	Low-medium	High if supported by demand
BTP-OAT almost zero	High	Very high: France	Media, BCE	Low	Media
Relative GDP per capita	Media	High	High	Media	Uncertain without productivity
Export vs Giappone	High in competitiveness	Media	High for exchange/prices	Low	Medium-high for export; low for ranking
Investments	Media	Low	Media	Very high	Uncertain after 2026
Primary surplus	High	Irrelevant	Media	Indirect	High if politically maintained
Reducing sovereign risk	High	High	Medium-high	Indirect	Medium-high, but sensitive to growth and debt
Household disposable income	High Street Occupation	Irrelevant	High Street Inflation	Media	Media
Potential growth	Still insufficient	Irrelevant	Low	Potentially high	Not yet proven

This matrix allows us to distinguish three categories. First , there are predominantly Italian results that are difficult to dispute: higher employment, more permanent contracts, a primary surplus, and improved relative fiscal credibility. Second , there are real Italian results, but they are amplified by the deterioration of others: especially the comparison with France on sovereign risk and with Germany on relative growth. Third , there are indicators that are strongly influenced by the international context or the chosen period, such as export ranking, relative GDP per capita, and the US debt outlook.

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24. What can be attributed to the Meloni government and what cannot

The question of attribution to the executive branch established in October 2022 requires particular caution. It is methodologically defensible to attribute to the current government the fiscal decisions adopted during its mandate, the continuation of the consolidation process, the revisions and implementation of the National Recovery and Resilience Plan (NRRP) during its term, the changes to labor taxation, employment policies, energy decisions, and administrative interventions actually approved and implemented . However, it is incorrect to automatically attribute to the government the entire increase in employment, the post-pandemic recovery, the consequences of previous pension reforms, the ECB's monetary policy, the decline in international inflation, the German industrial crisis, the French fiscal weakness, or the depreciation of the yen.

The strongest argument for domestic action is maintaining fiscal discipline in the face of strong political spending pressure , a result the IMF directly links to strengthening market confidence. IMF — Italy 2026 Article IV Consultation The most difficult aspect to attribute is the overall increase in employment, because it simultaneously reflects post-pandemic demand, tourism growth, PNRR investments, incentives, previous reforms, and demographic changes.

The OECD provides a balanced reading: it acknowledges that reforms and investments in the PNRR and the Structural Fiscal Plan are addressing structural weaknesses , including justice, public administration, competition, digitalization, childcare, and active policies, but continues to argue that long-term growth will remain modest without further action on productivity, human capital, energy, and business dynamism. OECD Economic Surveys: Italy 2026

The institutional conclusion must therefore avoid two extremes. It would be unjustified to argue that the government deserves no credit for the fiscal improvement and the management of the PNRR; it would be equally unjustified to attribute the entire macroeconomic improvement since 2022 to the current government, since a substantial part of it derives from processes initiated earlier, common European conditions, and international shocks.

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25. The post-2026 risk: the problem is not an "end of funds", but a fiscal cliff of investments and reforms

The current model's greatest vulnerability will be the transition from the NRRP to the post-NRRP phase. It's incorrect to automatically speak of a "collapse" after the Plan's end, because the investments made will continue to operate and the European budget, cohesion funds, national investments, and community instruments will continue to exist. The real risk is a fiscal-investment cliff , that is, a reduction in the pace of public investment and incentives in an economy where private capital accumulation is not yet strong enough to replace them.

The OECD reports that Italy's capital stock has seen almost zero growth on average since 2008, and that the recent recovery in investment has been significantly supported by tax credits and the National Recovery and Resilience Plan (NRRP). At the same time, productivity remains below the euro area average. OECD Economic Surveys: Italy 2026 — Enhancing business dynamism to raise productivity

The post-NRRP success must therefore be assessed through four highly concrete indicators: unsubsidized private investment , productivity per hour worked, investment in intangible capital, and the growth capacity of productive enterprises. If these indicators accelerate in 2027-2030, the Plan will likely have produced crowding-in and a permanent increase in productive capacity; if they remain weak while extraordinary public spending declines, the structural multiplier will have fallen short of expectations.

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26. The real crossroads 2027-2031: resilience or regime change

The IMF's baseline provides a particularly useful summary of the problem: 0.5% real growth in 2026 and 2027 , a modest recovery thereafter, potential growth around 0.6%, high employment but participation still below peers, and very high public debt vulnerable to growth and interest rate shocks. IMF Executive Board Concludes 2026 Article IV Consultation with Italy

This is not the description of an economy in crisis, nor of one that has already achieved regime change. It is the description of a country that has become more resilient to shocks and financially more credible, but still slow . Moving to the next category would require productivity growth to become high enough to offset the progressive decline in the working population; private capital to gradually replace the stimulus provided by the NRRP; employment rates to rise significantly toward European levels; the real wage gap with its partners to narrow; and imported energy to lose its share of production costs.

The OECD estimates that, in the long-term scenario, GDP growth will remain below 1% on average per year over the next decade , while GDP per capita growth could be close to 1.2% , primarily because population declines faster than employment. OECD Economic Surveys: Italy 2026 This forecast is particularly instructive: it shows that Italy could continue to improve its GDP per capita without experiencing particularly high aggregate growth. The same dynamic that is currently fueling one of the "overtakings" could therefore continue even in the presence of a declining population. This would be an improvement in average income, but not necessarily evidence of growing overall economic weight.

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27. Three structural scenarios for Italy after the PNRR

Scenario A — The PNRR becomes permanent capital

Under the most favorable path, projects are completed, the justice system and public administration maintain organizational improvements, the capital market becomes more effective in financing innovative businesses, digitalization and artificial intelligence increase the productivity of SMEs, and the increase in female and youth employment slows the contraction of the workforce. This scenario is consistent with the upsides identified by the IMF, which considers reforms, digitalization, and new technologies to be the main mechanisms capable of increasing growth compared to the baseline. IMF Executive Board Concludes 2026 Article IV Consultation with Italy

In this case, the 2022-2026 results would become the first step in a structural transformation: the improvement in the spread would be supported by a credible reduction in debt, high employment would be accompanied by higher wages, exports would grow through value added and technology, and the South could continue to converge thanks to greater infrastructural and private capacity.

Scenario B — Resilience without acceleration

This is the scenario closest to the baseline currently available: Italy relatively stable, with high employment, a primary surplus, competitive exports, slowly stabilizing debt, but real growth around 0.5-1% , still weak productivity, and progressively more unfavorable demographics. This is essentially the trajectory described by the IMF and OECD. IMF — Italy 2026 Article IV Consultation OECD Economic Surveys: Italy 2026

In this scenario, Italy continues to occasionally "overtake" more problematic economies, but without radically altering its long-term trend. The main benefit would be a reduction in country risk and greater resilience, not a return to growth rates comparable to the most technologically dynamic economies.

Scenario C — Post-PNRR cliff and re-emergence of stagnation

The adverse path would materialize if the end of the PNRR stimulus coincided with insufficient private investment, high energy prices, weak German and European demand, reform delays, and further demographic deterioration. The IMF explicitly identifies delays in public investment, a slowdown in fiscal consolidation, geopolitical escalation, rising energy prices, and deteriorating financial conditions among the risks that could reduce growth and confidence. IMF — Italy: Staff Concluding Statement of the 2026 Article IV Mission

In this case, the combination of weaker nominal growth and high interest costs would make debt reduction more difficult and could reopen the sovereign premium just as the shrinking labor force would reduce the quantitative contribution of employment to growth.

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28. The final judgment on the period 2022-2026

The most defensible interpretation of the available evidence is that Italy has achieved a real but asymmetric improvement . The country has significantly strengthened its labor market position, contractual stability, primary balance, and financial perception; it has maintained an exceptionally high export capacity and has revived an investment cycle that had been lacking for many years. These results are not simply a statistical illusion and cannot be explained solely by the deterioration of competitors. Both the IMF and the OECD explicitly recognize the greater resilience of the Italian economy, the progress of fiscal consolidation, and the positive contribution of reforms and investments. IMF Executive Board Concludes 2026 Article IV Consultation with Italy OECD Economic Surveys: Italy 2026

But the most favorable part of the "overtaking" narrative is amplified by circumstances that do not represent an Italian transformation : the German energy-industrial crisis, French fiscal deterioration, the currency effect on Japan, the prospective increase in US debt, and a strong temporary boost in NRRP investments. A significant part of Italy's relative position therefore derives from the fact that some comparators have deteriorated more than Italy or have experienced particularly severe shocks.

The crucial point is that productivity has not yet confirmed the regime shift . As long as the economy continues to have potential growth around 0.6-0.7%, relatively low research spending, real wages still below the pre-shock level, and a working-age population expected to shrink by millions, it will not be methodologically correct to describe the current phase as a definitive structural "overtaking" of the major advanced economies. IMF — Italy 2026 Article IV Consultation OECD — Engaging youth in the labor market amid population aging

The more accurate formulation is therefore different: between 2022 and 2026, Italy did not suddenly become a high-growth economy, but it became relatively more stable, busier, more fiscally disciplined, and less penalized by the markets than was the European perception of the previous decade . This represents a real and politically significant change. The question still remains whether greater stability is the end point or the platform from which to build greater productivity.

A definitive assessment of the current phase cannot be made in 2026. The real test will be the four-year period 2027-2030 : if private investment gradually replaces the extraordinary European stimulus, if the capital generated by the PNRR increases corporate performance, if productivity accelerates, if female and youth employment increases, and if debt begins to decline not only due to primary surpluses but also thanks to higher real growth, then the "five overtakings" will appear in retrospect as the first signs of a structural change. If these steps do not materialize, they will instead appear as a combination of Italian resilience, the relative weakness of competitors, and the exceptional support of the European investment cycle .

The most important conclusion is therefore also the simplest: Italy in 2026 is more solid than its old reputation as the Eurozone's weak link suggested, but it has not yet grown enough in productivity to consider the problems that have limited the country for thirty years definitively overcome . Progress is real; regime change remains to be seen.

Statistical Appendix — Italy 2026

Quantitative verification of the "five overtakes" and the structural variables

Closing date: September 11, 2026.

This appendix strictly separates observed data , provisional estimates , and projections . Where a policy formulation does not perfectly match the statistical source, the discrepancy is explicitly indicated. The sources used are exclusively institutional: ISTAT, Eurostat, ECB, IMF, OECD, WTO, the Japanese Ministry of Finance, and the European Commission .

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A. The five "overtakes": final verification table

Claim	Verified data	Data/base	Technical result	Audit note	Source
Italy second in the G7 for GDP per capita growth	The result depends on the time frame, the real/nominal measure and the demographic dynamics; in 2025 the Italian real GDP grows +0.5% , not in second place in the G7 for aggregate GDP	2025	Definition-dependent	Do not confuse GDP per capita growth with GDP per capita level, productivity, or aggregate GDP.	IMF World Economic Outlook, April 2026
Italy has overtaken Japan in exports	WTO 2025: Giappone $738 billion; Italy $726 billion	Year 2025, goods, current dollars	Not true for the whole of 2025	Italy is only $12 billion behind Japan; any overtaking on moving windows does not equate to an annual overtaking.
Italy climbs the job rankings	July 2026: 24.37 million employed; unemployment 5.8% ; in 2025 employment rate 20-64: 67.6%, latest EU	July 2026 / Year 2025	Real improvement, level still weak	Unemployment and employment rate measure different phenomena
Italy pays less than France	May 2026 ECB average: Italy 3.84%; France 3.74%	Monthly average, approximately 10 years	Not true about the ECB average in May	Possible daily reversals do not equate to structurally lower cost
US debt over Italy by 2031	USA: 142.1% GDP in 2031 ; Italy: 136.1%	IMF projection	True in the baseline, but it is a prediction	The crossover will happen as early as 2029 and 2030

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B. Italian growth: macroeconomic baseline 2024-2031

All values ​​after 2025 are IMF projections , not observed data.

Indicator	2024	2025	2026	2027	2028	2029	2030	2031
Real GDP, %	0,8	0,5	0,5	0,5	0,8	0,7	0,7	0,7
Real domestic demand, %	0,7	1,2	0,6	0,4	0,7	0,6	0,6	0,6
Final domestic demand, %	0,3	1,5	0,9	0,5	0,6	0,6	0,6	0,6
Private consumption, %	1,2	1,1	0,5	0,3	0,8	0,7	0,6	0,6
Public consumption, %	1,5	0,6	0,5	0,3	-0,3	0,1	0,3	0,4
Gross fixed investment, %	-3,1	3,5	2,3	1,0	0,9	0,7	0,7	0,7
Export of goods and services, %	-0,4	1,2	1,5	2,1	2,0	2,2	2,2	2,1
Import of goods and services, %	-1,0	3,6	1,9	1,9	1,5	2,0	1,9	1,8
Savings, % GDP	23,4	23,4	23,0	23,1	23,4	23,6	23,7	23,8
Investments, % GDP	22,3	22,2	22,5	22,0	21,8	21,8	21,6	21,5
Nominal PIL, € billion	2.202	2.258	2.320	2.381	2.441	2.499	2.558	2.618

Source and definition: IMF, Italy: 2026 Article IV Consultation , Table 1; real annual changes unless otherwise indicated.

Reading

The key point is that Italy's relative improvement does not coincide with an acceleration in aggregate GDP : the IMF records just +0.5% in 2025 and forecasts a further +0.5% in 2026 and 2027. Italy's relative strength must therefore be sought above all in resilience, the labor market, exports, and fiscal consolidation, not in a high absolute growth rate.

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C. G7 Comparison: Real GDP Growth in 2025

Village	Real GDP 2025, %
United States	2,1
Canada	1,7
United Kingdom	1,3
Japan	1,2
France	0,9
Italy	0,5
Germany	0,2

Source: IMF World Economic Outlook, April 2026. The database identifies the 2025 Italian value at 0.5%, Germany 0.2%, France 0.9%, Japan 1.2% and Canada 1.7%.

Audit conclusion: It is incorrect to use the GDP per capita result to claim that Italy had the second-highest economic growth in the G7 in 2025. The ranking for aggregate real GDP is markedly different.

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D. Labor Market: July 2026 Snapshot

Indicator	July 2026	Annual variation	Source
Busy	24.370 million	+307.000 / +1,3%
Employment rate 15-64	63,2%	+0,8 p.p.
Unemployment rate	5,8%	decreasing
Youth unemployment	18,9%	+0,2 p.p. m/m
Inactivity rate 15-64	32,8%	—
Permanent employees	16.583 million	+303.000
Fixed-term employees	2.486 million	-82.000
Autonomy	5.301 million	+85.000
Unemployed, annual change	—	-14.000 / -0,9%
Inactive 15-64, annual change	—	-307.000 / -2,5%
Employment in the quarter May-July vs. Feb-Apr.	—	+91.000 / +0,4%

European Employment Audit

Indicator 20-64 years	2025
Italy	67,6%
UE27	76,1%
Gap Italy-EU	-8,5 p.p.
Malta	83,6%
Netherlands	83,4%
Czech Republic	82,9%
Romania	69,0%
Greece	71,0%

In 2025, Italy had the lowest employment rate for 20-64 year-olds in the entire EU .

Audit conclusion: the Italian improvement is strong in dynamics , but does not eliminate the delay in level .

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E. Wages and purchasing power

Indicator	Value	Period	Status
Real wage growth year-on-year	+1,3%	Q1 2026	observed
Real salaries vs Q1 2021	-6,1%	Q1 2026	observed
Real wage forecast	-0,9%	2026	OECD projection
Real wage forecast	+0,2%	2027	OECD projection

The OECD specifies that the -6.1% compared to Q1 2021 is the widest gap among the large OECD economies analysed.

Consequence

This data prevents the increase in nominal GDP per capita from being used without qualification as proof of a similar increase in purchasing power: nominal GDP, real wages and disposable income are different variables .

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F. Export: Italy and Japan

F1. WTO Ranking — Goods, 2025

Ranking mondiale	Village	Export, thank you	World share
6	Japan	$738 billion	2,8%
7	Italy	$726 billion	2,8%
8	South Korea	$709 billion	2,7%

Japan-Italy difference: $12 billion , equal to approximately 1.6% of Japanese exports.

Fonte: WTO, Global Trade Outlook and Statistics — March 2026.

Verification conclusion

On the 2025 calendar, Japan has not been overtaken by Italy. Any claim of overtaking must therefore specify whether it refers to a subsequent twelve-month rolling window or to monthly/rolling data, not to the WTO 2025 final data.

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F2. Italia: export 2025

Indicator	2025
Export of goods in value	+3,3% a/a
Commercial surplus	€50.746 billion
Surplus 2024	€48.287 billion
Pharmaceuticals	+28,5%
Metals and metal products	+9,8%
Means of transport excluding motor vehicles	+11,6%
Food, beverages and tobacco	+4,3%

Source: ISTAT, foreign trade report December 2025.

The data allows us to qualify Italy's export strength as real , regardless of its position with respect to Japan.

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G. Industry: real production versus export value

G1. 2025 Financial Statement

Indicator	Variation 2025
Industrial production corrected for calendar	-0,2%
Energy sector	only major growing grouping
Pharmaceuticals	among the fastest growing manufacturing sectors
feeding	among the growing sectors
Computers/electronics	among the growing sectors
Textiles/clothing/leather	among the major declines
Means of transport	among the major declines

Source: ISTAT, Industrial production — December 2025 .

G2. July 2026

Indicator	Variation
Industrial production m/m	+0,7%
Average May-July vs. previous 3 months	-0,1%
Year-to-year production, correct calendar	0,0%
Consumer Goods YoY	-1,2%
I intermedi a/a	-0,8%
Capital goods year-on-year	-0,1%
Energy	+6,4%
Pharmaceuticals	+7,4%
Computers/electronics/optics	+2,4%
Chemistry	-3,4%
Electrical equipment	-2,8%
Other manufacturing/repairs	-4,6%

Source: ISTAT, September 10, 2026.

Interpretation

The combination of exports +3.3% in 2025 / industrial production -0.2% is crucial: it demonstrates that growth in export value and growth in overall production quantity are not synonymous.

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H. Productivity, capital and potential growth

Indicator	2024	2025	2026	2027	2028	2029	2030	2031
Industrial productivity including construction, %	-1,6	1,3	0,4	0,7	0,5	0,5	0,5	0,5
Unit labor cost, %	4,8	2,6	0,9	-0,4	1,9	1,3	0,6	0,3
Potential GDP, %	0,7	0,7	0,7	0,7	0,7	0,7	0,6	0,6
Employment, %	1,5	0,8	0,1	-0,7	-0,6	-0,7	-0,9	-1,0

Source: IMF Article IV 2026. Productivity reported by the Fund is that of industry, including construction , not the economy as a whole.

ISTAT structural data

Over the period 2015-2025 , the cumulative contribution of total factor productivity to economic growth was just 0.6 percentage points . ISTAT also notes that in the long run, capital intensity has not made a significant contribution to labor productivity, with the exception of ICT capital.

This is one of the most important numbers in the entire dossier.

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I. Investments

Indicator	Value	Period	Type
Gross fixed investment	+3,5%	2025	observed/IMF estimate
Gross fixed investment	+2,3%	2026	IMF projection
Gross fixed investment	+1,0%	2027	projection
Gross fixed investment	+0,9%	2028	projection
Gross fixed investment	+0,7%	2029-31	projection
Public investments	+9,6%	2025/2024	observed by ISTAT
Investments in intellectual property	+4,0%	2025/2024	observed by ISTAT
Aggregate investment	22,2% PIL	2025	FMI
Aggregate investment	22,5% PIL	2026	FMI
Aggregate investment	21,5% PIL	2031	projection

Sources: IMF and ISTAT.

Crucial note on the PNRR

The European Commission has set three legal and operational deadlines for the closure of the Recovery and Resilience Facility:

RRF Expiration	Data
Completion of milestones and targets	August 31, 2026
Last payment request	September 30, 2026
Last Commission Payment	December 31, 2026

Therefore, 2027 constitutes a real economic test: not because all European investment will disappear, but because the extraordinary flow of the RRF will end .

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J. Italian Public Finance: 2024-2031

J1. Balance, primary surplus and debt

% PIL	2024	2025	2026	2027	2028	2029	2030	2031
Public deficit	-3,4	-3,1	-2,9	-2,8	-2,5	-2,5	-2,5	-2,7
Primary balance	+0,5	+0,8	+1,2	+1,3	+1,8	+1,9	+2,0	+2,0
Structural primary balance	+0,2	+0,7	+1,3	+1,5	+2,0	+1,9	+2,1	+2,0
Gross debt	134,7	137,1	138,2	138,2	137,5	136,7	136,3	136,1

Source: IMF Article IV 2026.

Point not to be hidden

The debt does not fall immediately : according to the IMF baseline it goes from 137.1% in 2025 to 138.2% in 2026-27 , and then begins a slow decline.

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J2. Interest Expenditure

Year	Interest, € billion	% PIL
2024	85,5	3,9
2025	87,1	3,9
2026	95,2	4,1
2027	98,5	4,1
2028	105,4	4,3
2029	110,5	4,4
2030	117,1	4,6
2031	122,8	4,7

Fonte: FMI, Statement of Operations — General Government, 2024-31.

Key number

Between 2025 and 2031, in the IMF baseline, interest expenditure increases by €35.7 billion per year , from €87.1 to €122.8 billion: +41.0% nominal , calculated directly from the IMF values.

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K. Italy-United States: A Correct Debt Comparison

K1. General government gross debt

Year	Italy, % GDP	USA, % PIL	Country with highest ratio
2025	137,1	123,9	Italy
2026	138,2	125,8	Italy
2027	138,2	128,6	Italy
2028	137,5	132,1	Italy
2029	136,7	135,5	Italy
2030	136,3	138,9	deer
2031	136,1	142,1	deer

Sources: IMF Fiscal Monitor April 2026 and Article IV Italy.

Mathematical test

The crossover does not occur “in 2031”: in the IMF baseline it occurs between 2029 and 2030 .

In 2031:

USA 142.1% – Italy 136.1% = 6.0 percentage points of GDP.

But be careful about economic comparability

The table uses the same accounting measure— general government gross debt —and therefore the numerical comparison is legitimate. However, it is not legitimate to automatically deduce that Italian sovereign risk is lower than that of the United States, because the monetary regime, currency of issue, market depth, and global demand base are different.

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Italy-France: The True Anatomy of Convergence

L1. ECB Harmonized Sovereign Yield — May 2026

Village	Average monthly yield
Germany	3,05%
France	3,74%
Italy	3,84%
Euro area	3,45%

ECB sources.

Spreads derived from ECB data

Differential	May 2026
Italy-France	+10 pb
Italy-Germany	+79 pb
France-Germany	+69 pb

Calculation performed directly on ECB yields.

Conclusion: in the harmonized monthly average for May 2026 , Italy is not paying less than France ; it is paying about ten basis points more. Any intraday or daily overtaking must be dated precisely and should not be transformed into a structural statement.

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L2. French public finance

% PIL	2023	2024	2025	2026	2027	2028
Public deficit	-5,4	-5,8	-5,1	-5,2	-4,9	-4,5
Primary balance	-3,7	-3,9	-3,0	-2,7	-2,3	-1,7
Gross public debt	109,5	112,6	115,7	118,5	120,3	121,1
Real GDP growth	1,9	1,4	0,9	0,6	0,9	1,2

Source: IMF, France 2026 Article IV.

Italy-France Tax Comparison 2026

Variable	Italy	France
Deficit, % GDP	-2,9	-5,2
Primary balance, % GDP	+1,2	-2,7
Debt, % GDP	138,2	118,5
Real growth	0,5%	0,6%

The convergence of yields therefore has a clear quantitative explanation: Italy maintains a much higher debt, but currently has a significantly better fiscal flow position; France has a lower stock but much worse deficit and primary balance.

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M. Demography: the quantitative constraint

M1. Year 2025 / January 1, 2026

Indicator	Value
Resident population	58.943 million
Annual variation	-636 people
Born	355.000
Dead	652.000
Implied natural balance	approximately -297,000
Immigration from abroad	440.000
Emigration abroad	144.000
Migration balance	+296.000
Fertility	1.14 children per woman
Average age	47.1 years old
Population 0-14	6.852 million / 11.6%
Population 15-64	37.270 million / 63.2%
Population 65+	14.821 million / 25.1%
Over 85	2.511 million / 4.3%

Sources STAT.

Demographic geography

Area	Population change 2025
North	+2.2 per thousand
Center	0.0 per thousand
Noon	-3.1 per thousand

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M2. Long-term projection

Indicator	2023	2060
Working age population	base	-34%
Elderly people per person of working age	0,41	0,76
Equivalence	1 in 2.4	1 in 1.3
Employment/population ratio	—	-5,1 p.p.

Fonte: OECD Employment Outlook 2025.

The OECD also calculates that, maintaining historical productivity trends and without sufficient corrections, the demographic effect could drag GDP per capita towards an annual contraction of around 0.67% in the scenario illustrated.

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N. Research, innovation and AI

N1. Italian R&D

Indicator	Value
Spesa R&S intra-muros	€29.4 billion
Nominal growth y/y	+7,7%
R&D intensity / GDP	1,37%
Intensity 2022	1,37%
Intensity 2021	1,41%
Business R&D / GDP	0,80%
Growth in R&D in companies	+5,4%
Growth of public institutions	+14,5%
University growth	+9,9%
Small businesses	-2,3%

Period: 2023, with projections for 2024-2025. Source: ISTAT.

N2. AI use in businesses

Country/area	Companies with ≥10 employees using AI, 2025
UE	20,0%
Denmark	42,0%
Finland	37,8%
Sweden	35,0%
Germany	about 26%
France	about 18%
Italy	approximately 16.5%

Source: Eurostat, dataset isoc_eb_ai.

Conclusion: Italy is adopting AI, but in 2025 it will remain below the EU average.

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O. Energy and industrial competitiveness

O1. Dependence

The IMF estimates that over 70% of Italy's energy consumption is generated from imported fossil fuels , compared to just over 60% in the euro area .

O2. Producer Prices — July 2026

Indicator	Variation
Industrial production prices m/m	+2,4%
Industrial production prices year-on-year	+7,8%
Domestic market year-on-year	+9,3%
Internal market excluding energy	+3,3%
Foreign market year-on-year	+3,6%
Coke and refined products, domestic market	+54,0%
Chemistry, domestic market	+9,6%
Metallurgy/metal products, internal	+7,7%
Electricity and gas, internal market	+14,5%

Source: ISTAT, September 2, 2026.

The difference of 9.3% versus 3.3% excluding energy directly quantifies how much the energy factor is impacting domestic industrial prices.

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P. Families, income and social vulnerability

Indicator	2024	2025
Risk of poverty/social exclusion	23,1%	22,6%
Number of people interested	—	13.265 million
Risk of poverty	18,9%	18,6%
Low work intensity	9,2%	8,2%
Severe material/social deprivation	4,6%	5,2%

For family income:

Indicator	2024
Average annual family income	€39.501
Nominal growth	+5,3%
Real growth	+4,1%
Income of the richest 20% / poorest 20%	5.1 times
Previous report	5.5 times

Source: ISTAT.

Audit

The social picture is therefore mixed : overall risk of poverty/exclusion and low work intensity are improving, while severe material deprivation is increasing.

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Q. Southern Italy: growth and employment 2025

Area	Real GDP	Employment
Nord-Ovest	+0,5%	+0,9%
Northeast	+0,5%	+0,8%
Center	+0,5%	+1,1%
Noon	+0,6%	+1,5%
Italy	+0,5%	+1,1%

Source: ISTAT preliminary territorial estimate, June 26, 2026.

Mandatory warning: ISTAT expressly declares that these are preliminary estimates , built with still partial information, and that they may be subject to significant revisions.

At the same time, the Southern population will decrease by 3.1 per thousand in 2025 , compared to +2.2 per thousand in the North.

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R. PNRR: what is transitory and what can become structural

Element	Economic nature	After 2026
RRF Flow	temporary	ends
Financed construction sites	temporary in the flow	works remain
Infrastructures built	capital	permanent if productive
PA digitalization	organizational capital	can remain
Justice/PA/competition reforms	institutional	can remain
Direct employment stimulus	partly cyclical	can be reduced
Crowding-in private investment	structural	to be verified
Increased productivity	structural	not yet proven

The Commission had already indicated the need for Italy to accelerate reforms and investments, strengthen administrative capacity, especially at local level, and promptly address delays.

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S. Final Matrix: What Has Really Improved

Variable	Situation 2026	Judgment
Employment	24,370 mln; +307mila a/a	Greatly improved
Unemployment	5.8% July	Greatly improved
European employment rate	67.6% in 2025	Still structurally weak
Permanent contracts	+303 thousand a/a	Quality improvement
Real wages	-6,1% vs Q1 2021	Incomplete recovery
Export	+3.3% in 2025	Strong
Ranking export	Japan $738bn vs Italy $726bn	Annual overtaking not occurred in 2025
Industry	-0.2% in 2025; 0% y/y July 2026	Stagnant
Investments	+3,5% 2025; +2,3% 2026	Improved
Productivity	0.4% projected for 2026	Weak
Potential growth	0,6-0,7%	Central weakness
Deficit	-2,9% 2026 FMI	Major improvement
Primary balance	+1,2% 2026 FMI	Positive
Debt	138,2% 2026	Very high
Interests	€95.2bn 2026 → €122.8bn 2031	Increasing pressure
Relative spread France	only 10 bp May 2026	Extraordinary convergence
French deficit	-5,2% 2026	Significant French deterioration
US debt vs. Italy	2030 crossover in the baseline	Vero come forecast
R&S	1,37% PIL	Insufficient
AI companies	~16,5% vs UE 20%	Recovering, below average
Dependence on imported fossil fuels	>70% consumption	Strategic vulnerability
Fertility	1,14	Severe criticality
Population 65+	25,1%	Growing constraint
Southern Italy GDP	+0.6% in 2025	Economic improvement
Southern Italy population	-3,1‰	Structural deterioration
Poverty/exclusion	22,6%	Slight improvement
Severe deprivation	5,2%	Worsening

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T. The four corrections that must remain in the text intended for ministers

1. Exports. I wouldn't write "Italy has overtaken Japan in exports" without qualification. The 2025 WTO annual figure says Japan $738 billion, Italy $726 billion . Any subsequent overtaking should be identified as a rolling period or interim figure.

2. France. I wouldn't write in absolute terms "Italy pays less interest than France." The ECB average for May 2026 is 3.84% Italy and 3.74% France . The correct formulation is that the spread has compressed to minimal levels and may have reversed in specific market sessions.

3. US debt. I wouldn't simply write "in 2031 the US will overtake Italy." In the IMF baseline, the transition occurs between 2029 and 2030 : 2029 Italy 136.7%, US 135.5%; 2030 Italy 136.3%, US 138.9%.

4. Employment. The Italian record must be presented alongside the harmonized Eurostat data: 67.6% employment among 20-64 year-olds in 2025 versus 76.1% in the EU , last place in the Union. Otherwise, a dynamic improvement is correctly confused with a still weak level.

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U. The quantitative framework in ten numbers

For a ministerial reader who needs to understand Italy in less than a minute, the ten numbers that best describe the situation are these:

Number	Meaning
+0,5%	real GDP growth 2025
24.370 million	occupied July 2026
5,8%	unemployment July 2026
67,6%	employment rate 20-64 in 2025, latest EU
-6,1%	Real wages Q1 2026 vs. Q1 2021
€50.746 billion	trade surplus 2025
-0,2%	industrial production 2025
138,2% PIL	2026 debt, IMF forecast
0,6-0,7%	medium-term growth potential
1,14	children per woman in 2025

These ten data points explain the Italian situation better than any single ranking: the economy is more employed, fiscally more credible, and competitive on foreign markets, but continues to produce too little productivity growth to sustain wages, demographics, and debt in the long term . The tables above also show why the "five overtakings" should not be dismissed as propaganda—some represent real economic changes—but neither should they be used as proof of a definitive regime change. The quantitative test remains the 2027-2030 transition , when growth in private investment, productivity, and real wages strong enough to compensate for a structurally smaller workforce must survive the exit of the RRF.

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