The Italian economy grew 6.6% in 2021 following a record 9.0% contraction the year before, according to statistics bureau ISTAT, whilst the budget deficit and public debt were below government targets.

For the third consecutive year, Rome’s fiscal deficit was substantially lower than official forecasts, as three different governments overestimated the costs of steps aimed at bolstering the economy.

The 9.0% contraction in GDP in 2020, fuelled by ongoing lockdown restrictions, was slightly revised from the prior -8.9% figure.

The 2021 rebound was more robust than first forecast by the government, Reuters reports, which continued to upwardly revise its GDP forecast throughout the year.

The definitive 6.6% figure surpassed the latest official target of 6.0% growth unveiled in September last year, and is also marginally higher than the 6.5% provided by the country’s Economy Minister Daniele Franco.

For 2022, Prime Minister Mario Draghi's coalition government has indicated growth of 4.7%, yet the outlook has been impacted by rising energy prices and geopolitical unrest linked to the Ukraine crisis.

Furthermore, growth is predicted to have been affected by a Covid resurgence in the first quarter of this year, the Reuters report goes on to add. However, according to government ministers, growth will still surpass 4%.

Last year, Italy’s budget deficit stood at 7.2% of GDP, ISTAT said, falling short of the 9.4% official target and down from the 9.6% 2020 ratio.

"Growth was stronger than we expected early in the year and that meant tax revenues were more than €20 billion higher than we budgeted for," said a government official.

Furthermore, spending remained below the €10 billion target due to reduced expenditure on welfare, subsidies to Covid-affected businesses, salaries and public procurement, the official added.

The Prime Minister targets Italy’s deficit to decline to 5.6% of GDP this year.