The Bank of Italy has published its annual report on Emilia-Romagna’s economy, describing a year of moderate growth followed by a weaker start to 2026. Regional output rose by 0.5 percent in 2025, in line with the North East and Italy as a whole, supported mainly by business investment helped by tax incentives and easier financing conditions, as well as public investment linked in part to the National Recovery and Resilience Plan. The report says conditions then deteriorated in the first months of 2026 as the crisis in the Middle East intensified and geopolitical and trade tensions persisted, with the disruption of navigation through the Strait of Hormuz creating downside risks through higher energy and raw material prices and supply pressures. Sectoral performance was uneven. Industry broadly stagnated and exports were flat in real terms, with weaker sales outside the European Union offset by stronger demand from EU markets, especially Germany, while construction expanded on public works and services continued to grow modestly, supported by tourism and higher freight traffic at the port of Ravenna. The labor market remained comparatively strong, with employment up 2.0 percent in 2025 and unemployment falling to 4.1 percent, while household purchasing power increased moderately. In finance, lending to the private non-financial sector returned to growth, reaching 1.5 percent year on year by December 2025, driven chiefly by stronger mortgages to households, while credit to firms stabilized late in the year and asset quality improved. The report also notes that firms’ profitability weakened, liquidity stayed high, and adoption of artificial intelligence remained limited.

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