GDP, Bankitalia's alarm: zero growth with oil at USD 150
The Via Nazionale institute cut its estimates for GDP in the next three years due to the war in the Middle East and the rise in energy commodities. According to the forecasts, the Italian economy will grow by 0.5% this year (against the 0.6% estimated in December). Furthermore, the estimates for 2027 go from +0.8% to +0.5% and in 2028 from +0.9% to +0.8%
Key points
Italia risks zero growth this year and a contraction of 0.6% in 2027 if the price of oil, due to the conflict, were to jump above $150 a barrel this year and remain above $120 throughout 2026 and 2027, and if the price of gas were to remain above €120 a megawatt hour. This is what the adverse scenario of Bankitalia contained in its forecasts predicts where, "compared to the baseline scenario" (which estimates a GDP at +0.5% this year and in 2027) there would be "an increase in uncertainty, a deterioration of confidence and tensions in the financial markets, with a tightening of financing conditions".
Overall, the Via Nazionale institute cut its estimates for Italy's GDP over the next three years due to the war in the Middle East and the rise in energy commodities. According to the forecast, the Italian economy will grow by 0.5% this year (against 0.6% estimated in December). Furthermore, the estimates for 2027 go from +0.8% to +0.5% and in 2028 from +0.9% to +0.8%. The conflict and the increase in oil and gas prices 'will squeeze domestic demand in the current quarter and in the two following quarters' underlines Via Nazionale. Negative effects are expected on consumption, business investments and exports.
Bankitalia: "With rising energy prices inflation jumps to 2.6% in 2026"
According to Bankitalia, the rise in energy prices caused by the war in the Middle East could cause inflation to jump to 2.6% this year, up one percentage point from last year and the 1.7% estimate forecast just in December. According to the Via Nazionale institute, inflation is expected to return to just below 2% in 2027-28. "The transmission of energy price rises to wages and prices of other goods and services is gradual, also due to the small share of labour contracts awaiting renewal: net of the food and energy components, inflation rises only slightly to 2.0%" in 2026.
"Consumption weakens households, inflation erodes incomes"
Higher inflation and "worsening confidence" caused by the ongoing conflict and rising energy prices put at risk household consumption, which is "suffering from the erosion of real income". The report estimates that "household spending growth will remain weak this year and next, recovering strongly in 2028. Investments," Via Nazionale's experts add, "are slowing down markedly, especially in the machinery and equipment component, held back by deteriorating profitability and demand prospects, greater uncertainty and rising financing costs. Those in construction, however, continue to benefit from the completion of the works envisaged by the NRP".
"Uncertainty estimates high, conflict duration crucial"
According to Bankitalia, "uncertainty about the projections is exceptionally high" and "the evolution of economic activity and inflation will depend crucially on the duration of the conflict in the Middle East and the consequences for production and commodity transport flows".
