REGIONAL REPORT
Challenges and opportunities
International geopolitical instability( such as the Middle East and Russia / Ukraine wars) has put Italian metal-working companies through a“ continuous stress test” and led to unusual global business conditions. The tariffs introduced by the Trump administration in the U. S. have also had a clear impact on Italian manufacturers as well as affecting the cost of certain raw materials( imposed by other countries in response to the tariffs).
Italy’ s economic growth has been slow but resilient in the face of recent shocks, supported by reforms and investment under the National Recovery and Resilience Plan. Progressing on the reform agenda is key to foster broad-based growth and reducing government debt, according to the OECD Economic Survey of Italy.
Following GDP growth of 0.5 % in 2025, growth is expected by the OECD to slow slightly to 0.4 % in 2026 due to the drag from higher energy prices linked to the conflict in the Middle East, before recovering to 0.6 % in 2027. However, uncertainty remains high. An ageing workforce, persistently weak productivity growth, high public debt and strong competition from emerging market economies create longer-term challenges.
“ Pursuing the reforms under the National Recovery and Resilience Plan is essential to strengthen Italy’ s growth prospects,” OECD Chief Economist, Stefano Scarpetta, said, presenting the Survey in Rome on 23 April 2026 alongside Italy’ s Director General of the Treasury, Riccardo Barbieri.“ Further efforts are needed to improve outcomes for young people and other under-represented groups in the labour market, remove obstacles holding back business growth and secure competitive energy supplies.”
According to the OECD, despite the success of Italy’ s larger firms, many small and micro firms struggle to grow or to adopt new technologies, weighing on the economy’ s overall productivity and growth. A more streamlined regulatory and fiscal environment, stronger support for research and development, and the promotion of better managerial practices would help firms scale up and compete more
Image: Shutterstock. com.
Italy has put in place 7.8 billion euros by 2028 to strengthen the national space ecosystem and support its growth
effectively.
“ Italy is facing a shrinking workforce, yet 16 % of young people are not in employment, education or training( NEET) as of 2024, and some are looking for opportunities abroad. Smoother school-to-work transitions, stronger, high-quality vocational and adult training systems, and more effective labour market policies would help better mobilise Italy’ s young people and improve their economic opportunities,” outlined the OECD.
“ Energy costs are higher than in many OECD countries due to Italy’ s dependence on imported fossil fuels. They weigh on business competitiveness and household living costs. Lowering administrative barriers to investment in renewable energy and transmission, together with accelerating the shift from fossil fuels to electricity, would help reduce costs, cut emissions and ensure more secure energy supply,” it concluded.
An eye on growth
Confindustria is the main representation association of manufacturing companies and services in Italy. On 24 June 2026, in the presence of the Minister of Enterprise and Made In Italy( Adolfo Urso), it launched‘ Connext 2.0 – Aerospace, Defence and Security Supply Chains.’ This new project aims to build and strengthen Italian strategic industrial supply chains, starting with a sector that will be among the main drivers of the growth across Europe.
“ Today’ s debate is a debate on industrial policy,” said the President of Confindustria, Emanuele Orsini, in his speech.“ The NATO goal of spending on defence at 3.5 % of GDP by 2035 is not just a financial goal: it must be one of the pillars of Italian and European industrial policy. This decision, in fact, imposes a national strategy capable of transforming this choice into an opportunity to build a long-term industrial plan for the country where investments translate into innovation, skills, skilled employment and competitiveness.”
He emphasised that the priority is to generate growth in Italy, focusing on research and development at a national level, as“ investments in the aerospace and defence sectors always generate important dual-use effects, with strategic applications also in the civil field.”
The Minister, Sen. Adolfo Urso, emphasised the importance of space as a key sector in Italy, adding that“ Italian strength lies in its supply chain which combines great national champions, highly specialised SMEs, innovative startups and industrial districts spread across sixteen regions of the country.” He confirmed that Italy has put in place 7.8 billion euros by 2028 to strengthen the national space ecosystem and support its growth.
Image: @ FIAT.
The FIAT 600 HYBRID.
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