The Bank of Italy published its first-quarter 2026 Survey on Inflation and Growth Expectations, showing a broad deterioration in firms’ assessments of macroeconomic conditions and their own operating outlook amid the outbreak of the conflict in the Persian Gulf. Firms cited higher energy commodity prices and heightened economic and political uncertainty as key drivers. Demand weakened across all sectors, with industry excluding construction also reporting a worsening in foreign demand. Despite positive expectations for total sales over the next three months, the outlook for exports declined. Investment conditions deteriorated markedly, although 2026 investment plans were broadly unchanged compared with the previous survey, except for a moderate decline in industry excluding construction. The survey also reports that artificial intelligence adoption remained moderate at the beginning of 2026, more common among large firms and in services, with skill shortages and limited perceived applicability cited as the main barriers. Firms’ selling prices increased over the past 12 months at a pace similar to the previous survey and are expected to rise moderately over the next 12 months despite higher expected production costs, implying margin compression; consumer inflation expectations remained below 2 per cent across all horizons.
Bank of Italy 2026-04-14
Bank of Italy survey finds Persian Gulf conflict has worsened firms’ outlook while inflation expectations remain below 2 per cent
The Bank of Italy’s first-quarter 2026 Survey on Inflation and Growth Expectations reports a broad deterioration in firms’ assessments of macroeconomic conditions, demand and investment amid the Persian Gulf conflict, with export outlooks weakening despite positive near-term sales expectations. Artificial intelligence adoption is moderate, concentrated in large firms and services, and constrained by skill shortages and limited perceived applicability. Firms’ selling prices rose at a similar pace to the previous survey and are expected to increase only moderately despite higher production costs, implying margin compression, while consumer inflation expectations remain below 2 per cent.