Italy’s economic outlook has deteriorated following a sharp rise in energy prices, triggered by disruptions to shipping through the Strait of Hormuz and escalating geopolitical tensions involving Iran, according to the latest Prometeia Brief on Italy in the global economy.
The research firm has revised Italy’s GDP growth forecast for 2026 down to 0.4%, with inflation now expected to reach 2.9%. The effects of the energy shock are anticipated to be most pronounced in the second quarter, when economic activity is projected to contract modestly. While the National Recovery and Resilience Plan (NRRP) is expected to contribute approximately 0.3 percentage points to growth, acting as a domestic buffer, it will only partially counteract weaker household purchasing power and softening external demand.
The deterioration in Italy’s prospects reflects a broader global trend. World GDP growth for 2026 has been revised down to 2.6%, with considerable downside risks should instability in the Middle East continue. The United States enters this period from a relatively strong position, with growth forecast at 2.1%, though higher fuel costs and a cooling labour market are expected to weigh on private consumption over the course of the year. China, meanwhile, remains comparatively resilient. Growth of 4.3% is projected, underpinned by robust industrial output and export activity.
The Euro Area, however, faces the steepest costs from the current energy shock, given its significant reliance on imported energy. Regional growth has been revised down to 0.8% for 2026, while inflation is forecast to climb to 2.8%.
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