The Bank of Italy published the results of a survey of Italian industrial and service firms with 50 or more employees showing that views on the general state of the economy deteriorated further in the second quarter from the previous survey, with a broad worsening across sectors. Firms linked the impact on their activity to the conflict in the Middle East and the closure of the Strait of Hormuz, mainly through higher energy prices and other production costs. Assessments of firms' own operating conditions for the next quarter were less unfavourable overall, supported by improved expectations for total demand, particularly in services, although firms remained more cautious on foreign demand. Investment conditions worsened, but the balance of firms expecting to increase investment in 2026 over those expecting to reduce it remained positive and only slightly below the previous survey. Consumer price inflation expectations were between 2.5 per cent and 2.8 per cent depending on the time horizon. Firms' selling prices have accelerated and are expected to keep rising over the next 12 months, with most respondents reporting that they have passed through or plan to pass through part of the higher input costs to customers, though only to a limited extent.
Bank of Italy2026-07-14
Bank of Italy survey shows Italian firms see weaker economy and higher input costs from Middle East conflict
A Bank of Italy survey found that Italian firms' assessment of the overall economy worsened further in the second quarter, with firms citing the Middle East conflict and the closure of the Strait of Hormuz as drivers of higher energy and input costs. Near-term expectations for firms' own conditions were less negative, helped by stronger demand views in services, while investment plans for 2026 remained net positive. Firms also expect inflation of 2.5 per cent to 2.8 per cent and further increases in selling prices over the next 12 months.