From accounts to exports: Italy that surprises and leads

If we go back in memory to the difficult days of 2011-2012, when the spread on Italian ten-year government bonds reached 575 points compared tobundGermans of the same maturity, it seems almost impossible that today various international newspapers, as well as banks and analysts, and even the president of the European Central Bank Christine Lagarde (as happened in a recent interview with the French broadcaster Radio Classique), can indicateItalyevenas a reference "model" in the economic field,and not only for its rigorous management of public finances. In fact, among the G-7 economies, the Italian one boasts the public debt/GDP ratio that grew the least in 2020-2024 compared to the pre-pandemic levels of 2019 (only one point of GDP more). And Italy is also the only country in the G-7 that has returned to a primary state surplus before interest payments as early as 2024. While the public debts and deficits of large economies such as France, the United States and the United Kingdom are literally out of control.

But that's not all. Italy is no longer the "laggard" in growth, despite experiencing a certain slowdown in the economy in 2025 as a result of global turbulence. In fact,Italian GDP increased the most between 2020 and 2024 in the G-7along with those of the United States and Canada, while the iconic image of Germany as the "locomotive of Europe", with its economy in stagnation for six years, is now a faded memory. Furthermore, despite the threat of Donald Trump's tariffs, Italian exports reached those of Japan in the first seven months of 2025 in a continuous head-to-head with Tokyo for fourth place among world exporters, behind the giants China, the United States and Germany. Italy, thanks to its repeated trade and tourism surpluses, is now also a net creditor to the world, with a foreign investment position exceeding 10% of GDP. In addition, in Italythe number of employed people and the employment rate are at historic highs, while the unemployment rate is at its lowest.Furthermore, there have never been as many permanent employees employed in Italy as there are now. Record numbers, those of the Italian labor market. This is largely due to the extension of the retirement age, which keeps people from older cohorts in work, but it is a fact that more employed people create more income and more state revenue, which also benefits public finances. And then, wasn't this, after all, the long-desired objective of a structural pension reform? We Italians have already done it with Prime Minister Mario Monti and Elsa Fornero in 2011-2012, while Emmanuel Macron's France, today in the midst of a political, economic and financial crisis, simply dreams of a similar reform. Recent years have also seen another negative paradigm of Italy overturned, that of a South eternally struggling in economic growth behind the North-Centre. Since the pandemic onwards, this is no longer the case. In fact, the GDP of the South in 2020-2023 grew more than the GDPs of the North West, the North East and the Centre. The same happened with employment.

So, it is not only for the public finances kept carefully under control that the markets and rating agencies are rewarding Italy. They are doing so, declaring it openly, for a broader series of factors which also concern numerous positive aspects of the real Italian economy. Added to which is the current political and government stability which reassures investors and European and international institutions about the country's ability to maintain the virtuous course already undertaken during the pandemic by Mario Draghi's government, with its reliability and ability to implement the National Recovery and Resilience Plan. It is therefore not an exaggeration to say that we are witnessing the affirmation of an "Italy model" in a historical phase in which other reference models among the advanced economies, such as those of industrial strength and absolute German fiscal rigor, American liberalism or economic dirigisme and the French welfare state have entered into crisis and are today looking for less than canonical ways out such as the arms race, protectionism or taxation of the "super rich", which only a short time ago would have horrified themainstreamof economists.

Italy promoted by the markets and rating agencies

The spread between Italian and German ten-year government bonds, which at the end of 2022 was over 200 points, has now reduced to around eighty points by September 2025, the one with France has practically disappeared. On five-year maturities, Italy now pays lower yields than those of Paris.

In the last twelve months, rating agencies have continuously improved the ratings or outlooks relating to Italian sovereign debt. On 18 October 2024 Fitch confirmed the BBB rating and raised the outlook from stable to positive (rating then reconfirmed on 4 April 2025). On 28 October 2024, DBRS Morning Star confirmed the BBB (high) rating and raised the outlook from stable to positive. On 12 April 2025, with certainly the most important decision of the year, which gave a clear signal of the ongoing turning point in the perception of Italy, Standard & Poor's raised the rating from BBB to BBB+ with a stable outlook. On May 23, 2025, Scope confirmed its BBB+ rating with a stable outlook. On 24 May 2025 Moody's confirmed the BBB rating and raised the outlook from stable to positive. On 19 September 2025, exactly one week after the downgrading of France from AA- to A+, FITCH also raised, after S&P, Italy's rating from BBB to BBB+ with a stable outlook.

These are unmistakable signs of a recovery of Italy's credibility on international markets and in the eyes of evaluators who have not been seen for some time. But it is to be hoped that the rating agencies can further improve their judgments, bringing Italy's rating to at least A- level, which would more objectively reflect our country's progress.

The rigor of Italian public accounts and the financial difficulties of other countries

Over the last ten years, Italy has been able to maintain a constant disciplined line of its public finances: a conduct that is clearly demonstrated by the fact that the public debt/GDP ratio in 2024 (equal to 134.9% after the latest ISTAT revisions) is substantially the same as ten years earlier (with an increase of just one decimal place compared to 134.8% in 2014).

Before Covid, Italy had been able to maintain a flat profile of its debt/GDP. This ratio then surged in 2020 during the pandemic but was quickly brought back to pre-crisis levels, contrary to what happened in the other G-7 countries. Already in 2024 theItaly was the only G-7 country to return to surplusprimary stateand is on the way to quickly reducing the total deficit below the 3% established by European rules. The construction superbonuses have contributed significantly to supporting the post-pandemic recovery. They certainly could have been set up better, with spending ceilings and greater constraints that could have avoided excesses and fraud, but overall the costs of these incentives were reabsorbed quite quickly in public accounts thanks also to the boost given by construction itself to GDP, to employment (direct and induced), as well as to state revenues.

In many respects, 2025-2026 may now be the two-year period of ahistorical turning pointfor Italian public accounts, while the finances not only of France, now in the eye of the storm, but also of the United Kingdom and the United States, are fearfully slipping. So, Italy, long pointed out as the "black sheep" of debt, can today even present itself as theReference country in the G-7for responsible and rigorous management of the state budget, while austere Germany itself will instead have to increase its public debt if it wants to find the path to recovery after six consecutive years of stagnation. In short, Italy, at the level of the largest economies, from an earthenware vessel of public finances among many iron vessels as it was considered, can really become, now and in the next ten years, an iron vessel among many earthenware vessels. It is enough to read the data from the latest "Fiscal Monitor" of the International Monetary Fund from April 2025 to understand how public finances will fare in the main advanced countries between now and 2030, with today's policies unchanged. From 2019 to 2030, Paris' debt-to-GDP ratio will increase by 30.3 percentage points. But the United Kingdom and the United States will also record +20 points each, while the same former penalty champion Germany will record +16 points. And our country? After having completely absorbed the residual costs of the super construction bonuses, between 2019 and 2030 it will only see its debt/GDP increase by +3.9 percentage points, almost 8 times better than France and over five times better than the United Kingdom and the United States. According to the IMF, from 2025 to 2023 the increase in our debt/GDP will be marginal with a decline already from 2028 onwards. On the contrary, the French one will increase further by 12.1 points, after the previous +18.2 points accumulated from 2019 to 2025.

The comparison between Italy and France leaves no doubt about the dangerous spin of transalpine public finances compared to the disciplined line taken by Italy. French public debt exceeded that of Italy in absolute terms in 2020 and is now higher than Italy's by around 350 billion in mid-2025. France has an overall state deficit generated both by the primary deficit (above 100 billion euros per year) and by interest spending (currently above 60 billion but destined to quickly reach 100 billion with unchanged policies). Paris, therefore, is gripped as if in a vice by two "twin" deficits that could soon lead to theoverall deficit at 200 billion per year.Italy, on the other hand, has an overall deficit generated only by interest expenditure, finding itself in a primary surplus. The Italian primary state surplus in the twelve months from April 2024 to March 2025 was 9.6 billion, while in the same period France's primary deficit was 106.7 billion. Excluding interest expense,French debt has increasedfrom 2020 to 2024 of 443 billion euros, while the Italian one of just 81 billion in four years, meaning that French debt net of interest has grown approximately 5.5 times more than ours. France's debt held by foreigners, the central bank and French financial institutions, equal to approximately 112% of GDP in 2024, will soon exceed the similar debt of Italy, equal to 116%, perhaps already in 2025 or at most next year, with Italy having as much as 430 billion euros of debt, i.e. almost 20 points of GDP of its total debt, equal to approximately 135% of GDP, effectively "neutralized" by internal resources, in what is held directly by families and businesses, a source of "self-financing" that France does not possess.

Italy's post-Covid economic growth was among the strongest, thanks also to the South

Despite a slowdown in 2025, thegrowth of Italian GDPcompared to pre-pandemic levels, it is confirmed among the highest in the G-7 countries. According to the OECD's seasonally adjusted quarterly data, compared to the fourth quarter of 2019, in the second quarter of 2025 the increase in Italian GDP (+6.3%) is second in the G-7 only to that of the United States (+13%) and Canada (+8.4%), nations less slowed down bylockdownof 2020, and clearly ahead of France (+5.1%), the United Kingdom (+4.5%), Japan (+4.1%) and Germany (+0.1%).

If we compare the annual data, which the latest Istat revisions of September 2025 have further improved, especially with regard to the growth of 2023 (adjusted from +0.7% to +1%),Italy's GDP increased by 5.8% from 2019 to 2024,compared to 4.3% growth in France and zero growth in Germany. Among the large economies of the Euroarea, only Spain, compared to Italy, grew a little more: +6.8%.

However, it must be considered that Italy's post-pandemic recovery occurred with a lower contribution from public consumption compared to the other major European economies and in the presence of a significant demographic decline, while in other countries the population has grown. Therefore, if we analyze the GDP dynamics in 2020-2024 net of the change in public administration consumption, Spain's economic growth has already halved (from 6.8% to +3.4%), while that of Italy is higher (+4.7%); France sees its increase reduced by almost two percentage points (from +4.3% to +2.4%), while Germany suffers a sharp decline (-2.3%).

If we then consider the combined dynamics of GDP per inhabitant net of the change in public consumption, the economic growth of Spain, which many point to as a model, is clearly reduced (only +0.4% from 2020 to 2024, compared to 2019), that of France is significantly lowered (reducing to +1.4%), that of Germany is clearly negative (-3.5%), while onlyItaly stands out with a noteworthy increase in GDP (+5.9%).

Aconsistent contributionto Italy's post-pandemic recovery it wasgiven by the South.This element also represents an important paradigm shift because, while the North-South gap remains relevant, this demonstrates that the push of some adequate policies and decisions adopted in recent years (Industry 4.0 Plan, single SEZ, PNRR) can give the South a greater role as the driving force of our economy. From 2020 to 2023, compared to 2019,the GDP of the South grew by 6.7%,against smaller increases for the North West (+5.7%), North East (+4.2%) and Center (+2.4%).

Finally, it should be underlined that, in parallel with the growth of the economy, in recent years there has beenemployment also increased strongly in Italy,with the employment rate, the number of total employed and permanent employees who have reached their maximum levels while, on the contrary, the unemployment rate has fallen to historic lows since the current Istat series have existed. Also in this case the increase in employment was greater in the South and in the Islands compared to the other territorial macro-divisions, further demonstrating what was stated above.

Although the wave of inflation generated by the Russian-Ukrainian war has generated, not only in Italy, a reduction in real wages, which has not yet been fully recovered, at an aggregate level we can observe an improvement in the purchasing power of families. In fact, the increase in the number of employed people has led to a growth in the overall purchasing power of consumer families, i.e. their disposable income in real terms, deflated with the consumption deflator. Purchasing power measured by Istat rose from 1,153 billion euros in 2019 to 1,174 billion in 2024, recovering the declines that occurred temporarily in 2022 and 2023. In the twelve months from April 2024 to March 2025, the purchasing power of Italian consumer families then further rose to 1,178 billion euros, a level of over 58 billion higher in real terms than that of 2014, which marks the end of the "austerity" period.

Meanwhile, in the last decade also theGDP per capitaof Italy at purchasing power parity has recorded important progress, recovering the gap accumulated with other economies similar to us in the prolonged negative phase of the Italian economy from 2008 to 2014. If in 2008 the Italian GDP per inhabitant was substantially aligned with those of France and Japan and only slightly lower than the British one, in the following years Italy particularly suffered the effects of the global financial crisis of 2009 and the debt crisis sovereigns and subsequent austerity in 2011-2014. Subsequently, however, the gap that had developed with Japan, France and the United Kingdom was gradually recovered. In fact, in 2017 Italy overtook Japan, then in 2024 it also overtook the United Kingdom, while based on the European Commission's forecasts in 2025-2026 Italy's GDP per inhabitant at purchasing power parity will also reach that of France.

The numbers also show some significant improvements on the poverty front.In fact, despite a slight increase compared to 2023, when a minimum of 22.8% was reached, the percentage of people at risk of poverty or social exclusion (according to the Europe 2030 criteria) in 2024 was 23.1% in Italy, a level 1.5 percentage points lower than the pre-Covid level of 2019 (24.6%) and 5.3 percentage points lower percentage points of that of 2015 (28.4%). The trend improvement of this indicator in Italy in recent years has been mainly due to the sharp decline, from 2015 to today, in its sub-index relating to the percentage of severely deprived people, i.e. unable to satisfy seven or more of the thirteen fundamental personal and family needs identified by Europe. The number of severely deprived people has fallen in Italy from 7.4 million in 2015 (12.1% of the population) to 2.7 million (4.6% of the population) in 2024, i.e. to a level currently significantly lower than those of Spain (3.9 million, 8.3% of the population), France (4.3 million, 6.6% of the population) and Germany (5.2 million, 6.2% of the population).

The head-to-head between Italy and Japan in exports

Despite the uncertainty generated by the new US tariff policies desired by President Trump and despite the continuing crisis of two primary markets for us such as Germany and France,Italian exports continue to prove resilient and competitive.This is thanks to its exceptional differentiation in terms of number of products and target markets, the growing quality and innovation that characterize Made in Italy, as well as the progress in terms of modernization, robotization and digitalization of the production systems favored by the Industry 4.0 Plan launched by the Renzi Government.

The numbers speak.In the first half of 2024, Italy had overtaken Japanplacing itself for the first time in contemporary history in fourth place among the major world exporters, behind the giants China, the United States and Germany. The subsequent slowdown in our country's foreign sales, mainly due to the implosion of intra-EU trade, brought Japan back ahead of Italy in the second half of 2024, but only slightly.And now, in the first seven months of 2025, the head-to-head between Rome and Tokyo is continuing.In fact, in the period January-July 2025, according to Istat, Italy exported goods for 384.2 billion euros. The International Trade Center's estimate of Japanese exports in euros for the same period is 384.6 billion. Therefore, Italy and Japan are practically tied and precede South Korea (358.5 billion) and France (343 billion). This confirms that our country is now able to export on a par with a nation that has for years been the paradigm of competitiveness and total quality and which has a population approximately double ours.

In conclusion, in ten years, from 2015 to 2025, Italy rose from eighth place among world exporters to now compete for fourth position with Japan. Furthermore, as we have already highlighted in previous analyses, excluding motor vehicles, in the rest of the exported products (which cover approximately 92% of world trade)Italy is already clearly ahead of Japan.