Apr 13, 2026
3 min read
Read article US-Iran war on skies, Italian economy won't recover before 2027: Study
Study: Italian economy may not recover before 2027 due to US-Iraq war
The energy shock from the conflict threatens to actually delay Italy's economic recovery until next year.Even assuming a permanent truce and a slight drop in energy prices, it would still take at least seven to eight months to return to normal.There is plenty of time to significantly reduce 2026 results.This comes from forecasts contained in a Confesercenti-CER survey, according to which the impact of the energy crisis has diminished just two months after the conflict and the expected growth of the Italian economy in 2026.
What you need to know
GDP and consumption
The study found that even if the direct impact on fuel can be offset by the excise intervention, GDP will grow by €9.7 billion, or 0.3 percentage points less than the previous scenario, while consumption will decrease by €3.9 billion, and households will absorb part of the impact (-3.9 billion savings).
Read also: Expensive fuel, companies receive +88 million per week.State +61 million
Accelerating investments
Investments will suffer the biggest slowdown, down 7.7 billion compared to pre-conflict projections.Cost increases and uncertainty are weighing on: rising energy prices are eroding margins and confidence, and companies are postponing investment decisions.
For more information: War with Iran, what will be the long-term effects and costs of the energy crisis?
Concerns for the tourism industry
According to the Confesercenti-Cer survey, particular concerns can be found in the tourism sector: the sector has already recorded an increase of 2.9 billion dollars in increased spending during the year (of which 2.6 for foreigners) and 11.29 million less attendance.And demand is likely to remain weak unless fuel uncertainty, which is fueling mistrust among travelers and operators, is resolved.
Grunchy: "We need a common EU policy to reduce energy costs"
Nico Gronci, president of Confesercenti, said: "In the past five years, the company has experienced everything and created antibodies: focused, persistent, waiting for a new phase of development.""Today we are experiencing a shock similar to that of 2022. We are reacting, but we cannot continue to react only to emergencies. It is time for the EU to develop a real common policy to reduce energy costs. The role of governments will also be crucial: at a stage like this, the speed of intervention can make a difference. Excise duty cuts will further contribute to relatively mismatched bills.
The Italian Bank Hypothesis
Today, the Bank of Italy risks ending the year in the negative if the war in the Middle East and rising energy prices slow Italian economic growth, and crude oil prices remain at long-term highs.
Also read: Bank of Italy cuts GDP estimate: wartime is important
The two Bankitalia scenarios
There are two scenarios considered by the Bank of Italy: in the basic case, shocks to the price of oil and gas will gradually decrease during the coming months.GDP for 2026 will therefore remain at +0.5% compared to +0.6% in the December forecast, and GDP for 2027 will rise from 0.8 to 0.5%.Inflation rose to 2.6% this year, above the ECB target, before falling below the threshold next year.Inflation affects disposable income, resulting in "weak consumption growth" for households.Commercial investment, which in recent months has encouraged the recovery of bank loans in the most important sector for Italian industry: machinery and equipment, is also affected.Only the construction sector will benefit from the long-term benefits of Pnrr funds.Then there is the worst case, defined by the economists of the Bank of Italy with the word "bad": a case where the price of oil will not exceed $ 120 per barrel in 2026 and the beginning of 2027, and the price of gas will remain close to the threshold of 120 euros per megawatt hour.A level that could cause inflation to rise to 4.5%, while the conflict will affect consumer and business confidence, turmoil in the financial markets and "reduced financial conditions" by banks.
Research Ref. "The effects on inflation and GDP appear manageable"
"The magnitude of the increase in energy commodity prices suggests a less severe shock compared to the shock that occurred in 2022, after the war in Ukraine. Therefore, the impact on inflation, which rose to 3.2% this year, and on GDP growth, at 0.4%, also seems manageable," we read the 2026 forecasts carried out by Ref Ricerche, a consulting firm specializing in macroeconomic analysis, in light of geopolitical tensions in the Middle East.However, the scenarios identified in the investigation do not take into account the prolonged closure of the Strait of Hormuz or the destruction of energy infrastructure in the affected regions.
Forecast for 2027
Regarding Italy, according to Ref Researcher, "the volume of our public debt indicates a high focus on fiscal policy, and it is no coincidence that the goal for 2025 targets progress to the maximum of 3 percent for the deficit - we read in the press release, - According to a preliminary assessment of this, only one goal is left out of ten. But the strategy has led to a reduction in the gap and an improvement in Italy's ratings by rating agencies."In terms of numerical projections, the Ref assumes GDP growth for 2027 of 0.6% (slightly higher than last year) and a drop in inflation from 3.2% to 1.7%.However, public debt will increase from 138.4% to 138.5%.
Also read: Fitch confirms Italy BBB + rating: Stable outlook
