Global Macro Chart of the Day "(#104): What happens in Italy when the..."

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Global Macro Chart of the Day "(#104): What happens in Italy when the..."

Global Research

17 June 2026ab

Global Macro Chart of the Day Economics

Global(#104): What happens in Italy when the

construction music stops? Arend Kapteyn

Economist

arend.kapteyn@ubs.com

+44-20-7567 0531

Construction has accounted for roughly one third of growth the past 6 years

Since 2019, Italy’s economy has grown at an annualised pace of around 1.4% — 3–4

times faster than in the previous two decades, and outpacing France, Germany and the

euro area— with unemployment falling to its lowest level since the 1980s.

Almost all of the growth outperformance has come from fixed investment and, in

particular, the construction sector, where value added has risen by around 50%,

contributing roughly 0.3pp per year to GDP growth. The problem in sustaining this is

that almost all of it seems to have come from massive amounts of fiscal stimulus. First,

the Superbonus housing renovation scheme, which started in 2020, provided household

tax credits to cover 110% of the costs of energy-efficient home renovations. While it is

estimated to have reached only around 4–5% of the housing stock, the fiscal cost was

substantial, at roughly 10½% of GDP. Second, Italy has been one of the largest

beneficiaries of the EU’s Recovery and Resilience Facility (RRF). To date, around 7.4% of

GDP has been disbursed, of which roughly 5% GDP has been spent, with about 35%

allocated to construction.

With the Superbonus largely phased out and RRF funding set to taper next year, there is

significant uncertainty around Italy’s underlying growth rate. For now, leading indicators

remain supportive: construction confidence is elevated (around one standard deviation

above normal), and employment remains near record highs.