Italy's economy is forecast to grow by at least 1.2% in 2025, according to a junior minister in the Treasury, as the government drafts its medium-term structural budget plan for submission to the European Commission by 20th September.

Italian daily Il Sole 24 Ore reported that Rome aims for a 2025 GDP growth target of 1.3% to 1.4% when accounting for the effects of planned tax cuts and increased spending. Without these policy changes, the growth forecast for next year is 1.1%, the report adds.

“An estimate of 1.2% for 2025 works, if it is higher we will be happy,” Economy Ministry Undersecretary Federico Freni told Reuters at the TEHA business forum in Cernobbio.

Last April, the Treasury projected a 1% growth in GDP for this year and 1.2% for 2025 under a no-policy-change scenario, without setting more ambitious targets.

The upcoming plan will also include an updated framework for Italy's public finances.

This year, the EU placed Rome under an Excessive Deficit Procedure, requiring Italy to align its fiscal plans with EU regulations.

The Treasury's strategy aims to reduce the fiscal gap in accordance with EU guidelines and must adhere to the latest reforms of the bloc's fiscal rules.

The infringement procedure mandates that Italy cut its structural budget deficit, excluding one-off factors and business cycle fluctuations, by 0.5% or 0.6% of GDP annually.

Sources informed Reuters late last month that in its medium-term structural budget plan, Prime Minister Giorgia Meloni's government intends to adhere to its commitment to reduce the deficit-to-GDP ratio below the EU's 3% threshold by 2026.

Furthermore, Il Sole 24 Ore reported that Italy's deficit-to-GDP ratio might drop below 4% this year, compared to the 4.3% estimate projected in April, thanks to a favourable trend in tax revenues.