Bank of Italy cuts Italian growth outlook after US tariffs .

The Italian economy will grow by 0.5% this year, far below the government’s official 1.2% estimate, the country’s central bank said on Friday, cutting a 0.7% forecast it made in December and warning of the impact of U.S. trade tariffs.

The central bank forecast that tariffs announced by U.S. President Donald Trump on Wednesday would have a negative impact of more than half a percentage point on Italian growth in 2025-2027.

It said this estimate did not include any retaliatory measures by other countries or any broader repercussions of Trump’s announcements for international markets.

Italian “exports are projected to be strongly affected by the US tariff increases, with virtual stagnation this year and a return to gradual growth over the next two years,” the bank said in its forecasting report.

The euro zone’s third largest economy has barely grown in recent months.

Gross domestic product edged up by just 0.1% in the fourth quarter of last year from the previous three months after stagnating in the third quarter.

Full-year growth came in at 0.7% in both 2024 and 2023. The Bank of Italy cut its forecast for Italian growth in 2026 to 0.9%, down from 1.2% in its December projection.

Italy’s average EU-harmonised consumer price inflation rate should come in this year at 1.6%, the central bank said, marginally up from the 1.5% it forecast in December.

Source: Marketscreener