The Secret to Italy's Economic Recovery Nobody Gives the Government Credit For

Italy has posted better-than-expected growth for three consecutive years. Here is the actual story of what is driving the recovery — and why Meloni's government deserves less credit and more than it gets.

Italy's economic performance over the past three years has surprised most of the analysts who cover it. The country that was consistently described as Europe's permanent patient — burdened by high debt, low growth, political instability, and declining industrial competitiveness — has posted GDP growth that, while modest by global standards, has exceeded both its own recent historical average and the expectations of most international institutions that monitor it.

The recovery's drivers are complex and not entirely the product of government policy, which is why assigning credit or blame to the Meloni administration requires more care than political discourse typically allows. The genuine government contributions: effective use of NextGenerationEU funds, which Italy receives the largest absolute allocation of any EU member state and which have been deployed into infrastructure and digital investment with more implementation efficiency than previous EU fund programmes; a relatively stable fiscal framework that has maintained Italy's borrowing costs at manageable levels despite elevated European concerns about Italian debt sustainability; and a business registration simplification programme that has modestly improved the regulatory environment for small businesses.

The factors the government cannot take credit for: Italy's extraordinary tourism recovery, which has seen record arrivals and record spending in 2024 and 2025, and which reflects global demand for Italian cultural and culinary experiences that preceded and will outlast any government; the partial reshoring of manufacturing that has returned some production from Asia to European locations, with Italy's combination of manufacturing tradition and supply chain infrastructure making it a beneficiary; and the specific economic geography of Southern Italy's first sustained economic growth episode in decades, driven by a combination of NextGenerationEU investment, diaspora remittances, and the digital nomad influx to cities like Palermo, Lecce, and Matera.

The Iran war's energy price shock is the immediate threat to this recovery. Italian industry is more energy-intensive than the EU average, and Italian government fiscal space for energy support measures is more constrained than France or Germany's.