ITALY | MARKET INSIGHT


Italy’s construction industry is expected to take a downward turn by 3.8% and 5.7% in 2025 and 2026 respectively, due to issues such as fall building permits and rising public debt. In another setback to the industry, US tariffs are likely to raise short-term costs in Italy’s construction sector. However, with the industry expected to recover in 2027, it’s not all doom and gloom.


T


he construction industry in Italy is expected to contract in real terms by 3.8% in 2025 and 5.7% in 2026, due


to falling building permits, increasing public debt and weakness in the residential sector. According to the Bank of Italy, the public debt of the country reached an all-time high of €3.034trn ($3.3trn) in March 2025, a 0.3% increase compared to February 2025. In May 2025, the European Commission reported


that Italy’s public debt is expected to reach 136.7% of GDP in 2025 and 138.2% in 2026. In a setback to the construction industry’s output, the annual gross fixed capital formation in dwellings declined by 6% year-on-year (YoY) in Q1 2025, according to the Italian National Institute of Statistics (ISTAT), this was preceded by a YoY decline of 7.1% in Q4 and 5.5% in Q3 2024. The Italian government is also planning to cut €4.6bn ($5bn) of the €5.8bn ($6.3bn)


earmarked to fund the automotive sector during 2025–2030 period, due to a global slowdown in sales of electric vehicles (EVs). In another setback to the industry, US tariffs, including a 10% general tariff and a 25% tariff on steel, iron and automotive goods, are likely to raise short-term costs in Italy’s construction industry. These tariffs increase the price of imported machinery, materials and components, leading to more expensive


www.hoistmagazine.com | October 2025 | 29


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