Italy is on track to become the euro zone's most indebted country by the end of this year, overtaking Greece, according to recent projections. Greece's public debt is expected to fall to approximately 137% of gross domestic product (GDP) in 2026, down from 145.9% in 2025, marking a significant decline of over 60 percentage points since 2020. This reduction follows a decade-long financial crisis and three international bailouts.
Italy's Rising Debt Burden
In contrast, Italy's debt is projected to peak at 138.6% of GDP in 2026, up from 137.1% in 2025, as outlined in its latest budget plan. This increase underscores Italy's persistent fiscal challenges and sluggish economic performance, which has been among the weakest in the euro zone. While Greece has experienced steady economic growth in recent years, Italy's economy has struggled to regain momentum, contributing to its rising debt ratio.
Economic Divergence
The diverging trajectories highlight the contrasting economic recoveries of the two countries. Greece, after severe austerity and reforms, has seen its debt-to-GDP ratio improve markedly. Italy, however, faces structural issues, including low productivity growth, high public spending, and political instability, which have hindered its fiscal consolidation efforts. The shift in the euro zone's debt rankings underscores the ongoing challenges for the bloc's larger economies.
