Conjuncture

Confindustria: uncertainty and tariffs worsen the economic picture. Risk of structural crisis for industry

Via dell'Astronomia Research Centre analysis: rates and energy prices fall

by Nicoletta Picchio

18 April 2025

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More obstacles than pushes. Uncertainty and tariffs worsen the economic picture, even as rates and energy prices fall. This is the message coming from the Congiuntura Flash analysis of the Centro studi di Confindustria: modest GDP growth is expected in the first quarter of 2025. Services slow down, industry slows down. The ECB continues in the cut in rates, the one paid by Italian companies fell to 3.99 in February, from 5.59. The markets expect the last cuts to be -0.50 points in 2025, then the stop.

But this is despite the wave of uncertainty generated by the constant announcements on duties and the duties themselves are holding back trade and, with the instability of the financial markets, spending and investment decisions. The only positive side effect, says the CSC, is that energy costs are falling.

Uncertainty holds back investment

Investment is the main concern: confidence deteriorated in March, falling below the 2024 average. Economic policy uncertainty has increased, holding back investment. Judgments on the conditions for investing in the first quarter of 2025 worsen compared to the end of 2024, both in services and construction, while they remain almost unchanged in industry.

The duties will have a negative impact mainly on manufacturing. For industry, a stabilisation could be glimpsed: the change in the first quarter was positive, +0.4%, after five quarters of decline. In February, the RTT reports a deep decline in turnover, confidence worsens, the Pmi reports a decline in March. With the duties there is a risk of a structural crisis.

The braking of services

Services are on the brakes: tourism is off to a good start in 2025, +7.1% per annum, foreign tourist spending in January. But other indicators for services are negative: RTT reports a sharp decline in February, business confidence has fallen in each of the first months of 2025.

The weakness of consumption

Consumption is weak: in Q4 2024 there was a downward correction in real household income (-0.6 per cent), limiting the annual expansion to +1.2 per cent. The savings ratio fell towards pre-pandemic values (8.5 % from 9.1 %), favouring consumption. Negative indicators at the beginning of 2025: retail sales remained static in February (+0.1 % for food).

Employment growth continued in the first months of 2025, despite the slowdown in economic activity. On a two-month basis, the number of employed persons grew by 1.0%, over 230,000, compared to the fourth quarter of 2024. The decline in unemployment also continued.

Slight recovery of production in Germany

In the Eurozone, the change in output in the first quarter, taken in February, showed a slight recovery in Germany, +0.4 per cent, a decline in France, -0.2 per cent, and a contraction in Spain, -0.6 per cent. US growth was good before the announcement of duties, in China exports grew temporarily in anticipation of the heavy duties.

The impact of tariffs on growth

It is precisely to duties that the SCS has devoted a focus: the lowest impact on growth, between duties and uncertainty, will be -0.3 per cent in 2025-2026, due to a lower dynamic of exports of goods, -1.2 per cent, and of investments in machinery, -0.4 per cent. Instead, it is crucial to conclude new EU trade agreements with other important economic partners (Mercosur, India).

The interconnections between the US and Italy are profound: the US is the leading non-EU destination for Italian goods, services and ide. They hold primacy both as the location of industrial companies controlled by Italian ones and as the country of origin of multinationals in Italy. Manufacturing generates almost all Italian exports to the US, accounting for more than one-tenth of manufacturing sales abroad (10.8%). Sales to the US directly and indirectly generate almost 7% of Italy's manufacturing output, approximately EUR 90 billion. The most exposed sectors are pharmaceuticals, motor vehicles, and machinery.