Bank of Italy Cuts Growth Forecast to 0.5% This Year and Next

The Bank of Italy lowered the country’s economic growth forecast for this year and next due to the impact of the US war on Iran.Author of the article:You can save this article by registering for free here. Or sign-in if you have an account.(Bloomberg) — The Bank of Italy lowered the country’s economic growth forecast for this year and next due to the impact of the US war on Iran.Subscribe now to read the latest news in your city and across Canada.Subscribe now to read the latest news in your city and across Canada.Create an account or sign in to continue with your reading experience.Create an account or sign in to continue with your reading experience.Gross domestic product in the euro-area’s third-biggest economy is seen rising 0.5% in both 2026 and 2027, compared to previous forecasts for gains of 0.6% and 0.8% respectively, according to the central bank’s latest projections released Friday. The institution still sees a 0.8% increase for 2028.“The outbreak of the conflict and the spike in energy prices will have a negative impact on the short-term outlook, squeezing domestic demand in the current quarter and in the two quarters ahead,” officials said in the report. “Economic activity is assumed to regain strength in early 2027, as inflationary pressures ease.” The Iran war has driven up oil and gas prices, with forecasts for growth being revised in countries including France and Germany. Get the latest headlines, breaking news and columns.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againInterested in more newsletters? Browse here.Italy, the European Union’s second-largest gas consumer after Germany, relies on the fuel for about 40% of its energy mix, Prime Minister Giorgia Meloni is under pressure to shield citizens with ad hoc tax cuts and other measures. That in turn is putting a strain on public finances, with the government trying to balance between protection and fiscal probity.Consumer price inflation is set to rise to 2.6% in 2026, mainly as a result of the surge in commodity prices, and then to return to just below 2% in 2027 and 2028, the central bank said.Postmedia is committed to maintaining a lively but civil forum for discussion. Please keep comments relevant and respectful. Comments may take up to an hour to appear on the site. You will receive an email if there is a reply to your comment, an update to a thread you follow or if a user you follow comments. Visit our Community Guidelines for more information.365 Bloor Street East, Toronto, Ontario, M4W 3L4© 2026 Financial Post, a division of Postmedia Network Inc. All rights reserved. Unauthorized distribution, transmission or republication strictly prohibited.This website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more about cookies here. By continuing to use our site, you agree to our Terms of Use and Privacy Policy.You can manage saved articles in your account.and save up to 100 articles!You can manage your saved articles in your account and clicking the X located at the bottom right of the article.