Italy business lobby cuts GDP forecasts on US tariffs, geopolitical tensions

MILAN (Reuters) -Italy's main business lobby Confindustria on Thursday cut its economic growth forecasts for this year and next, as U.S. trade tariffs and geopolitical tensions hurt exports.

Moreover, with both factors expected to be long lasting, the outlook for the euro zone's third-largest economy is unlikely to improve any time soon, Confindustria added.

The group said it expected Italy's gross domestic product (GDP) to expand by 0.5% this year, marginally down from a 0.6% estimate it made in April, before the United States reached a deal with the European Union which imposes a 15% tariff on imported European goods.

"The export outlook has been significantly revised downward, due to the U.S. tariff on European goods and the intensification of global geopolitical tensions," Confindustria said.

"Italy's GDP growth in 2025 and 2026 will be mainly driven by investment, and to a lesser extent by household consumption," the lobby said, while export growth will be "close to zero" in both years, also hurt by the strength of the euro.

Later on Thursday Italy's government is set to update its own economic forecasts, which are expected to be close to those of Confindustria.

The government's 2026 budget framework will forecast growth of 0.5% or 0.6% this year and around 0.8% in 2026, people familiar with the matter have told Reuters.

Italian GDP grew by 0.7% last year and by 1% in 2023.

The most recent forecasts by the International Monetary Fund (IMF) and the Organisation for Economic Cooperation and Development (OECD) envisage Italian growth of 0.5% and 0.6% respectively this year.

(Reporting by Sara Rossi, editing by Gavin Jones)

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