Italy’s growth outlook weakens amid Iran conflict, business Lobby warns

Wednesday 25 March 2026 - 12:00

Italy’s economy is expected to grow just 0.5% in 2026, the country’s main business association, Confindustria, said on Wednesday. This is a downgrade from its previous forecast of 0.7% in October, as the organization highlighted the potential risks if the Iran conflict continues.

Last year, Italy’s GDP rose by 0.5%, marking the third consecutive year of growth below 1%. Confindustria’s report noted that the 0.5% projection assumes the conflict in Iran will be resolved by the end of March.

The business lobby warned that if hostilities persist into the second quarter, Italy’s GDP could stagnate, and if the conflict continues until the fourth quarter, the Italian economy could enter a recession, shrinking by 0.7% in 2026 due to higher energy prices and disrupted trade.

For 2027, Confindustria expects a slight rebound, with growth of 0.6%. The government, led by Prime Minister Giorgia Meloni, is expected to update its projections next month, having previously forecast 0.7% growth for 2026.