Italy is a beautiful, unique, and often contradictory country. In economics too.
Our numbers, looked at separately, seem to tell different stories. Employment has risen, unemployment has fallen, investment has supported the economy, and the country has shown a level of resilience greater than it is often given credit for. And yet, when we get to the most immediate figure - GDP growth - Italy continues to move at an almost structural slow pace.
In 2025, Italy’s GDP grew by 0.5%. For 2026, Istat forecasts growth of 0.7%, while the European Commission stops at 0.5%. Italy is neither in recession nor standing still. Still, it is growing far too slowly to make up lost ground, steadily raise incomes, and support the weight of an aging society.
The country seems to have learned not to fall, but it still has not learned how to run.
The most positive data comes from the labor market. In 2025, employment rose again and the unemployment rate fell to 6.1%, one of the lowest levels in recent decades. Comparing the fourth quarter of 2025 with the fourth quarter of 2019, Italy’s GDP grew by 4.3% - more than Germany, which stood at 2.4%, but less than France, at 6.4%, and especially Spain, which reached 12.6%.
These figures disprove two common assumptions: that Italy has always been the worst performer in Europe after the pandemic, and that jobs are no longer being created in this country. In reality, employment has been one of the main drivers of economic improvement in recent years.
But this is exactly where the paradox begins. If the number of employed people rises and GDP grows only slightly, it means that the value produced by each worker is not increasing enough. We are working more, but we are not managing to produce proportionally more wealth.
The word that sums up this difficulty is productivity.
That does not mean Italians work little or work badly. Many companies achieve levels of efficiency, quality, and technology comparable to those of the best international competitors. The problem is that these areas of excellence coexist with a very large part of the production system made up of small, undercapitalized, poorly digitized companies that are often concentrated in low value-added activities.
Italy has nearly 4.5 million businesses, and the majority have fewer than ten employees. Small size can encourage flexibility, specialization, and closeness to the customer, but it becomes a limitation when it prevents investment in research, training, international expansion, artificial intelligence, and managerial organization.
A small company can be extraordinarily creative, but on its own it is unlikely to have the resources needed to sustain multi-year innovation programs. It often depends directly on the entrepreneur and on that person’s ability to oversee customers, production, finance, and people. When that structure does not evolve, the company’s growth stalls, and with it the growth of the broader economic system.
Added to this is the wage problem. According to the OECD, in the first quarter of 2026, real wages in Italy increased by 1.3% compared with the previous year. That is a positive sign, but real wages remain 6.1% below the first quarter of 2021, the widest gap among the major OECD economies.
Weak wages mean more cautious consumption, less capacity to save, greater difficulty buying a home, and a stronger tendency for skilled workers to look for opportunities abroad. But wages and productivity are two sides of the same problem: a company that innovates, exports, and invests in skills can distribute a larger share of the wealth it generates; a company with low productivity has far narrower margins.
Another contradiction has to do with savings. Italian households hold significant financial and real estate wealth and have relatively low debt levels compared with many Western countries. And yet, too small a share of that wealth reaches businesses in the form of risk capital.
Italy is therefore a country rich in assets, but relatively poor in capital available to help companies grow. Many businesses still depend on bank credit and the personal resources of entrepreneurs. When they need to pursue an acquisition, enter a new market, or invest in complex technology, they often discover that they do not have an adequate financial structure.
This is also why many good Italian companies are sold when they should be growing: not always because the entrepreneur wants to exit, but because scaling up requires capital, governance, and expertise that the company has not managed to build.
The NRRP has supported construction, infrastructure, digitization, and the energy transition. But its success will not be measured only by the percentage of funds spent or by the number of completed projects. It will be measured by the productivity gains those investments are able to generate over time.
Demographics also make this transformation urgent. Italy is one of the oldest countries in the world, and the working-age population is set to decline. In an aging society, growth cannot depend only on increasing the number of employed people: it must come from each worker’s ability to produce more value through better technologies, continuous training, and more efficient organizations.
Artificial intelligence can be an extraordinary opportunity, but buying a tool does not mean transforming a company. Introducing advanced software into an inefficient process can even amplify its weaknesses. What is needed are managers, skills, data governance, and the ability to redesign processes.
Ultimately, Italy’s economic problem does not appear to be a lack of resources. We have savings, competitive companies, manufacturing capacity, universities, creativity, and international reputation. What we struggle with, rather, is combining these elements into a system capable of growing steadily.
The numbers tell us that we have been able to endure, create jobs, and keep unemployment contained. But they also tell us that wages have not yet recovered their lost purchasing power, productivity remains weak, and GDP continues to grow by only a few tenths of a point.
We are not a country standing still. We are a country that moves a great deal, often with great effort, without fully managing to turn that movement into progress. The next challenge for the Italian economy is not simply to work more, but in placing greater value on the work we already do.
