The prolongation of the conflict in the Middle East could jeopardize the growth of the Italian economy.

This is what emerges from the Forecast Report - Spring 2026 of the Confindustria Research Center, presented in Rome on March 25 under the significant title “Wars, tariffs, uncertainty: growth at risk”.

The president of Confindustria, Emanuele Orsini, stressing that the impact on GDP will be determined by the duration of hostilities, hypothesized three possible scenarios: if the conflict ends in four weeks, Italy and Europe would obtain a growth of about +0.5%; if the war extends to four months it would lead to stagnation; while in the worst-case scenario, with the conflict lasting up to 9 months, GDP in 2026 could shrink by up to -0.7%.

Therefore, the war in Iran is a decisive factor, involving Israel and several Gulf countries and which has led to the blockade of the Strait of Hormuz, a crucial hub for global energy supplies, with immediate effects on prices and international trade.

Implement concrete measures immediately

In this scenario, Confindustria emphasizes the need for a prompt and coordinated response at national and European levels. The duration of the conflict is indeed the decisive variable for the economic outlook over the coming months and requires the activation of concrete measures to support businesses and households. In particular, it becomes a priority to contain the effects of the energy shock, safeguard the competitiveness of the production system and strengthen investments.

Macroeconomic scenario 

The global macroeconomic picture is unfolding in a highly volatile context, already marked by trade tensions among major economies and now further aggravated by the effects of the conflict in the Middle East, which are impacting the economy mainly through the energy channel. 

In this context, the Confindustria Research Center simulations indicate very significant price increases. Oil could rise by up to 90% and gas by 50%, fueling new inflationary pressures and a consequent tightening of financial conditions.

World trade is bearing the consequences of this picture and is slowing significantly, and among the areas most exposed to the negative effects of the global scenario is the Eurozone.

Italy: fragile growth and rising inflation 

According to the CSC baseline scenario, growth in Italy forecast for 2026 stands at +0.5%, but it is significantly affected, as we have seen, by the evolution of the international context.

In 2027 the Italian economy should recover only moderately (+0.6%) in the baseline scenario, remaining at very contained rates. In addition to the downside risks linked to the war in Iran, others are added, related to the implementation of the PNRR, a possible further depreciation of the dollar, the continuation of high uncertainty, and the possibility that even the Fed's rate cuts are smaller than expected.

According to the Report of the CSC, during 2026 inflation is expected to rise significantly from the lows at the start of the year, peaking near +3.0%. In 2027, conversely, inflation is expected to return slowly to more moderate levels, as energy price variations are reabsorbed: on average it is expected at +2.2%.

Italian exports slow down

In the CSC baseline scenario, the growth of Italian exports will slow to +0.6% in 2026. In 2027 it is expected to rise to +1.8%, at low rates compared to pre-pandemic levels. The contribution of net exports to GDP growth will remain negative in 2026 and will return just positive only in 2027.

In 2025, l’Italian exports to the United States reached 70 billion euros (+7.2%), but net of pharmaceuticals and extraordinary orders there is a contraction of 5.7%, a sign of the difficulties emerging in several manufacturing sectors. According to estimates by the Confindustria Research Center, if the current tariff structure is confirmed, losses for Italian exports could exceed 16 billion euros in the medium term.

At the same time, Italian imports from China exceeded 60 billion euros in 2025 (+16.4% on 2024). China is increasingly specialized in medium-high technology sectors, whose share of Chinese exports to the rest of the world has risen from 28% to 42% in the last five years.

In this scenario, there is nonetheless a positive element regarding Italian companies that show significant adaptability. Each year, in fact, about 8% of Italian products change destination, compared with 6% of German ones. Trade diversification thus remains a key element to strengthen the resilience of the production system.

Defense and aerospace: a driving force for innovation

A possible stimulus for the Italian growth in the coming years could come from increased national defense spending. The expected increase, from 1.5% to 3.5% of GDP over the next decade, can generate significant positive effects on the economy if oriented toward investments and domestic production. When these conditions are met, the impact on GDP can reach up to +3.0% cumulatively, but conversely, a scenario characterized by greater reliance on imports would drastically reduce the benefits, limiting them to about +0.9%.

Positive effects of political stability

Alongside the risk factors, the Report also highlights some elements of resilience, including the positive effects of political stability in recent years.

The drop in interest rates on bank loans generated in 2025 an estimated benefit of about 4.6 billion euros per year for businesses, which at steady state could rise to up to 13.8 billion.

According to the Research Center's estimates, political stability may have contributed between 0.5 and 1.4 billion euros per year to the reduction in the cost of credit, strengthening the financial conditions of the production system.