Bank of Italy reports 1.4% economic growth in Basilicata as energy costs cloud outlook

The Bank of Italy published an update on Basilicata’s economy estimating that output grew 1.4% in the first half of 2026 compared with the same period of 2025, following a slight contraction last year. Growth exceeded Italy’s 0.9%, supported mainly by a partial recovery in automotive production and construction activity financed through the National Recovery and Resilience Plan. Available indicators nevertheless pointed to weaker economic conditions in the second half, particularly because of the Middle East crisis and its effects on energy prices. The recovery remained uneven. Higher production at Stellantis’ Melfi plant supported a 29.5% increase in exports at current prices in the first half, but exports excluding transport equipment fell 12.1%. Surveys of industrial firms indicated weak activity during the first nine months, while investment remained subdued and businesses expected further weakness in 2027. Services activity was also weak despite increased tourism. Employment grew 2.5% in the first half, supporting household income, but inflation limited the increase in purchasing power to 0.7%. Annual consumer price inflation reached 3.9% in September, up from 0.5% in December 2025. Bank lending to the private nonfinancial sector grew 2.8% annually in June, compared with 1.2% in December 2025, before slowing to 2.2% in August according to provisional data. Business lending increased 3.1% in June, but the expansion remained confined to medium-sized and large firms, while loans to smaller businesses fell 2.7%. Household financing from banks and finance companies grew 2.8%, supported by mortgages and consumer credit. Credit quality remained broadly stable overall, although the rate of new nonperforming loans rose to 5.7% for businesses in the four quarters ending in June and edged down to 0.6% for households.