Italy's economy barely moved in 2024 as euro slides against dollar

Italy's gross domestic product grew by 0.69 percent in 2024, according to World Bank data, a pace that underscores the persistent weakness in the eurozone's third-largest economy. The figure sits well below the European Union average and reflects the structural headwinds that have constrained Italian growth for more than a decade: an ageing population, emigration of working-age citizens, and a public debt burden that remains among the highest in the bloc at 77.3 percent of GDP.

Inflation, meanwhile, has cooled to 0.98 percent, a sign that price pressures have eased across the economy. Yet the low inflation rate offers little comfort to policymakers; it signals weak demand and limited pricing power among Italian firms, consistent with the sluggish growth picture.

The labour market remains a drag. Unemployment stood at 6.39 percent in 2025, above the eurozone average and reflecting the difficulty young Italians face in finding stable work. This imbalance has fuelled continued outward migration, particularly among graduates seeking better opportunities abroad.

On currency markets, the euro has weakened notably against the dollar. The exchange rate fell from 1.1595 on 22 May to 1.1467 on 19 June—a decline of roughly 1.1 percent in a month. Against other major currencies, the euro has held more steadily: it trades at 0.8665 against sterling and 7.7624 against the Chinese yuan. The dollar strength reflects divergent economic momentum between the United States and the eurozone, where growth remains anaemic.

Italy's modest expansion and currency headwinds arrive as the country faces mounting pressures on its tourism sector, which generates substantial foreign exchange. Record summer temperatures across Europe, now approaching 40 degrees Celsius in parts of Italy, are straining both residents and visitors. Venice's new mayor has proposed raising the day-tripper entrance fee to as much as €50 in an effort to manage overcrowding, a sign of the tension between tourism revenue and quality-of-life concerns in Italy's most visited cities.

The data underscore why Italian policymakers remain focused on debt sustainability and structural reform. With growth barely outpacing inflation and unemployment elevated, the margin for fiscal manoeuvre remains constrained, even as the European Central Bank's interest rate decisions continue to shape borrowing costs across the bloc.