GDP: CsC raises 2026 GDP forecast to +1 per cent, confirms +0.6 per cent for 2027 -2-

Thanks to a good first half of the year, the National Recovery and Resilience Plan (PNRR) and limited energy price rises

(Il Sole 24 Ore Radiocor) -

The factors underlying the slowdown in 2027, on the other hand, can be found in the interplay between rising energy prices, their impact on inflation and the rise in interest rates: the price of oil, at over $100 a barrel, is set to remain at record highs until the Strait of Hormuz reopens, whilst the price of gas is expected to remain high until the end of the year, both due to fears of shortages resulting from the closure of Hormuz and the need, in Europe, to replenish stocks. The rise in inflation (4.2 per cent in September) “will reduce households’ purchasing power, dampening consumption towards the end of the year and then again at the start of 2027”, whilst the ECB is expected to implement “three further rate rises” in the coming months, which will curb consumption and investment. Added to these factors is the end of the National Recovery and Resilience Plan (PNRR), resulting in “a slowdown in investment spending, tempered by the substantial remaining PNRR funds that will be spent after 2026 (around 47 billion, of which 27 billion in 2027, significantly less than the approximately 42 billion spent in 2026)”. The risks to this scenario, according to the think tank, include a possible reduction in shipping traffic through the Strait of Hormuz and potential attacks on oil and gas production facilities, with “negative impacts on commodities” as well as “volatility in financial markets” and, in particular, a continuation of the upward trend in yields on sovereign bonds in Europe. “The assumption underlying the forecast scenario for the Italian economy is that, following the mid-term elections in the United States, a solution to the US-Iran war will be found – as also announced by President Trump – and that the normalisation of shipping traffic will begin in January”. According to CsC, partial operation of the Strait of Hormuz is considered sustainable until May at the latest.

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