Economic Bulletin No. 1 - 2026

Economic Bulletin
January 2026
Vai alla versione italiana Site Search

The global economy continues to expand, but the high uncertainty is weighingon the outlook

The US economy continued to grow markedly in the third quarter of 2025. As in the first half of the year, investment in AI-related technology made a significant contribution, while at the same time fuelling international trade. The momentum of global trade boosted economic activity in China, at a time of weak domestic demand. The OECD expects global growth to weaken slightly in 2026. Risks are tilted to the downside, due to trade and geopolitical tensions and to the potential adjustments in the financial markets in the technology sector.

Euro-area GDP growth remains moderate

Euro-area GDP accelerated slightly in the summer months, with very uneven dynamics across the main countries. According to our estimates, GDP grew moderately in the autumn, driven especially by the further increase in activity in services. Last December, the Eurosystem staff macroeconomic projections revised euro-area GDP growth upwards, to 1.2 per cent this year and to 1.4 per cent in the two years 2027-28. Consumer price inflation, which averaged 2.1 per cent in 2025, is expected to decline slightly in both 2026 and 2027, and then to return to 2.0 per cent in 2028.

The ECB keeps the key interest rates unchanged

At its October and December meetings, the ECB Governing Council kept the key interest rates unchanged. The cost of credit remained the same between August and November. The growth in lending to non-financial firms reflected the still weak demand and remained stable; growth in lending to households instead strengthened, above all as a result of real estate purchases.

Economic activity in Italy expands at a modest pace

Italy's GDP increased slightly in the third quarter, owing to the sharp rise in exports and to the expansion in investment, which benefited from the tax incentives and from other measures under the NRRP. Household consumption grew modestly, reflecting still unfavourable expectations for the international economic outlook. According to our estimates, economic activity continued to expand moderately in the fourth quarter, driven by the service sector, especially business services, and by a recovery in industry. The prospects for manufacturing remain uncertain, partly because of more intense competition from China in several sectors. According to our December projections, GDP will grow by 0.6 per cent in 2026, and then strengthen in the two years 2027-28.

The current account surplus remains ample

Following the contraction in the spring, export volumes returned to growth in the third quarter, in part as a result of exceptional developments in some sectors. The current account surplus remained large between July and September, thanks to the positive trend in goods balances and investment income. Export volumes, net of some very volatile components, stabilized in October and November. Net purchases of Italian government securities by foreign investors continued at a slower pace. The positive net international investment position widened.

Employment starts to increase again

Headcount employment returned to growth in the autumn months. The unemployment rate decreased further, while labour market participation declined among young workers. In the non-farm private sector, wages and salaries continued to rise moderately, slightly above inflation.

Inflation remains subdued

Inflation was lower than the euro-area average in the fourth quarter of 2025, reflecting more moderate growth in the prices of services and a steeper drop in energy prices. Inflation excluding the most volatile components fell below 2 per cent. Producer price pressures continue to ease. According to our December projections, consumer price inflation will decline to 1.4 per cent in 2026, from 1.7 per cent last year; it will gradually pick up again in the following two years, nearing 2 per cent on average in 2028, reflecting the temporary increase in energy prices due to the introduction of the EU's Emissions Trading System 2 (ETS2) legislation.

Growth in lending strengthens

In the autumn, the cost of bank funding and the lending rates remained broadly unchanged. Lending to households and firms accelerated. Looking at the breakdown by economic sector, loans to service firms recorded stronger growth and lending to construction firms turned positive, while the contraction in loans to manufacturing firms eased. According to the Italian banks that took part in the euro-area bank lending survey (BLS) conducted between late September and early October, both the credit standards and the general terms and conditions applied to loans to firms remained unchanged in the third quarter.

Net borrowing as a share of GDP declines

Based on the latest information, net borrowing as a share of GDP declined in 2025, while the public debt-to-GDP ratio increased. The budget law approved last December left the deficit unchanged in 2026 compared with the previous legislation, and expanded it by 0.3 percentage points of GDP per year on average for each of the two following years.

Full text

  1. 16 January 2026
    Economic Bulletin No. 1 - 2026
    PDF 3 MB
  2. 16 January 2026
    Economic Bulletin No. 1 - 2026 - Statistical appendix
    PDF 1 MB
  3. 16 January 2026
    Economic Bulletin No. 1 - 2026 - ePub version
    EPUB 8 MB
  4. 16 January 2026
    Economic Bulletin No. 1 - 2026 - Data for charts
    ZIP 272 KB