Bank of Italy Lowers 2027 Growth Forecast, Predicts Sharp Rise in Inflation
Bank of Italy's Economic Outlook and Inflation Projections
Revised Growth Forecasts for Italy
ROME, June 12 (Reuters) - The Italian economy will grow by 0.6% this year and 0.4% in 2027, the country's central bank said on Friday, confirming its previous estimate for 2026 but trimming next year's outlook from a 0.5% projection made in early April.
Factors Impacting Economic Activity
"Economic activity is set to be affected by weaker domestic
demand, held back by the surge in energy prices and even higher geopolitical uncertainty," the Bank of Italy said, forecasting a jump in inflation this year compared with its previous estimate.
Coordination with Euro Zone Central Banks
The projections were prepared as part of a coordinated exercise prepared by euro zone central banks to feed into the European Central Bank's forecasts for the euro zone published this week.
Recent Economic Performance
GDP Growth in Early 2027
Gross domestic product in the euro zone's third-largest economy grew by 0.3% in the first quarter from the previous three months, national statistics bureau ISTAT reported last month, revising up a previous printout.
The Bank of Italy said quarterly GDP would probably remain stagnant over the rest of this year, "before gradually returning to growth in early 2027."
Reasons for Downward Revision
The slight downward revision of its 2027 forecast was "mainly on account of the effects of higher commodity prices on consumption."
Comparison with Government Forecasts
The Italian government in April forecast that GDP would grow by 0.6% both this year and next.
The Bank of Italy projected a 0.7% GDP growth rate for 2028, which would be a sixth consecutive year of sub-1% growth for Italy's chronically sluggish economy.
Inflation Trends and Projections
Current and Future Inflation Rates
Italy's average EU-harmonised consumer price inflation rate (HICP) should come in this year at 3.1%, the report said, sharply up from the 2.6% it had forecast in April.
Inflation next year will slow to 2.0%, the central bank estimated, up from a previous 1.8% projection.
Reporting Credits
(Reporting by Gavin Jones and Mirko Miorelli, writing by Gavin Jones, editing by Gianluca Semeraro)