The Bank of Italy published its Economic Bulletin No. 1/2026, pointing to continued global expansion but elevated uncertainty and a moderate outlook for the euro area and Italy. In the Bank’s December projections cited in the bulletin, Italy’s GDP growth is expected to be 0.6 per cent in 2026 and then strengthen in 2027-28, while consumer price inflation is projected to ease to 1.4 per cent in 2026 from 1.7 per cent in 2025 before gradually rising towards 2 per cent on average in 2028. The bulletin notes that US growth remained strong in the third quarter of 2025, supported by AI-related investment that also boosted international trade, while the OECD expects a slight weakening in global growth in 2026 amid downside risks from trade and geopolitical tensions and potential financial market adjustments in the technology sector. For the euro area, the Eurosystem staff projections referenced revised GDP growth up to 1.2 per cent for 2026 and 1.4 per cent for 2027-28, with inflation (2.1 per cent on average in 2025) expected to dip in 2026-27 before returning to 2.0 per cent in 2028. In Italy, activity is described as expanding at a modest pace, with third-quarter growth supported by exports and investment and fourth-quarter momentum driven by services and an industrial recovery; the manufacturing outlook remains uncertain partly due to stronger competition from China. The current account surplus remained large in July-September, export volumes returned to growth, foreign investors’ net purchases of Italian government securities continued at a slower pace, and the net international investment position widened. Employment resumed growth in autumn as unemployment fell, while youth participation declined; bank funding costs and lending rates were broadly unchanged and lending growth to households and firms accelerated, led by services, with construction lending turning positive and the contraction in manufacturing loans easing.

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