Flash Economic Survey

Confindustria: economy at a standstill – oil prices falling but inflation and interest rates rising

Analysis by the Research Centre on Viale dell’Astronomia: international tourism is coming to a sudden halt

by Nicoletta Picchio

26 June 2026

Torna il super dollaro, petrolio sotto 74 dollari

3' min read

Translated by AI

Versione italiana

3' min read

Translated by AI

Versione italiana

The economy is stalling. This is the forecast for the second half of the year from the Confindustria Research Centre. The agreement to end the war in Iran is shrouded in considerable uncertainty, whilst transit through Hormuz are restricted. Although the price of oil has returned almost to pre-war levels (US$74 per barrel on 24 June, down from an average peak of US$104 in May), inflation remains high, interest rates have risen – curbing credit – and foreign tourism has come to a sudden halt. The second quarter is feeling the impact of the war, but the third quarter is set to improve. Industry has held up so far and investment is holding steady thanks to the NRRP.

Inflation and interest rates

Inflation rose in May to +3.2%; core inflation has also started to rise again, at +2.0%, and it will take time for it to ease. The ECB has raised interest rates to 2.25 per cent; the markets expect only a further 0.25 per cent increase by the end of 2026.

Challenging investments

Investment is proving more challenging: funds from the National Recovery and Resilience Plan (PNRR) will continue to support investment for a few more quarters, but the conditions for investment have deteriorated and growth expectations are therefore lower. The rise in lending rates – averaging 3.56 per cent in April – will curb the flow of finance, including for investment. Furthermore, business confidence rose only slightly in June and remains low.

In April, employment continued to rise, supporting household incomes, which have been hit by rising prices. Retail sales fell by 0.3% in volume terms, and car sales were down in May. This could signal a decline in consumption in the second quarter.

Industry is holding up: in April, industrial production rose by 0.5 per cent, bringing the growth rate for the second quarter to +1.0 per cent. In May, the PMI strengthened into expansionary territory, reaching 52.9; the international situation – including tariffs and trade wars – remains the main source of uncertainty about the future.

Exports have hit a setback: down 2.8% in April, but the average for the last three months remains positive. Mixed trends: still positive in the US, but down in the Middle East, Turkey and Spain. Metal products are leading the way, the pharmaceuticals sector is slowing down, whilst textiles and clothing and furniture are performing poorly.

The slowdown in tourism

The services sector is not being driven by tourism. The Gulf War brought the boom to a halt, and spending by foreign visitors in Italia is falling: down 3.2 per cent year-on-year in April. The S&P Global PMI index confirms a moderate decline in the services sector.

The situation in Europe

In the eurozone, German industry has seen a decline; industrial production fell in Spain by 0.5 per cent, whilst it remained stable in France and Germany, where the year-on-year change was -0.5 per cent. The US economy is growing. China is experiencing a two-speed economy: exports are up by 19.4 per cent year-on-year in May, as is industrial production (up 4.5 per cent), whilst domestic demand remains weak.

The Research Centre is focusing on oil: the risk of shortages has not been eliminated, and the summer will be critical. The data available for the period March–May 2026 show a sharp drop in global production, from 107.3 to 93.7 mbg. The main cause is the restriction on transit through the Strait of Hormuz, but also damage to certain facilities and limitations on storage capacity in some countries. In the short to medium term, even with the reopening of the Strait of Hormuz, production levels will remain well below global demand.

The oil uncertainty

According to the scenario drawn up by the EIA, there will be as many as 10 months of sharp stock drawdowns, averaging -5.2 mbg from March to December – a rare occurrence. The impacts will vary: the EU, and even more so China and Japan, depend almost entirely on oil imports. The use of available stocks and the curb on consumption driven by high prices should be sufficient to overcome the U-shaped trend in oil production, which is expected to remain low until the end of the year. The most critical period will be the summer of 2026: if traffic through the Strait of Hormuz remains restricted for a prolonged period, there is a risk that restrictive measures will also be needed in the West to reduce consumption and avoid shortages. In Italia, the sectors most affected would be freight transport, private cars and motorbikes, industry, agriculture, and domestic and office heating. The proportion used for electricity generation is minimal.