The economic outlook continues to deteriorate. The main factor is the ongoing conflict in Iran, which is keeping pressure on energy prices high and is having an ever-wider impact on the real economy. This is highlighted by the Confindustria Centro Studi which, in the May Flash Economic Survey, It highlights how rising inflation is beginning to affect household and business confidence, increasing the risks to consumption, investment and credit.

The impact of the energy shock is more evident than in previous months. In May, Brent crude oil remained above $100 per barrel, whilst gas prices remained at levels significantly higher than those recorded at the end of 2025. This trend is already helping to drive up inflation and, in Italy, has resulted in consumer prices rising to 2.7%, with energy prices recording a year-on-year increase of 9.2%.

Investment and confidence are slowing down

The first signs of a slowdown are emerging in the area of investments. In the first quarter, demand for credit from businesses to finance new projects actually fell, whilst confidence amongst capital goods manufacturers continues to deteriorate. Even the households are being more cautious, against a backdrop where employment growth remains modest and the deterioration in business confidence risks leading to a slowdown in consumer spending

For the time being, the industry is still showing a certain degree of resilience. In March, industrial production showed signs of recovery, driven mainly by capital goods. The most recent indicators, however, point to a weakening of demand, with expectations deteriorating in both industry and the services sector.

Exports remain resilient, but uncertainties are mounting

In the first quarter of 2026, Italian exports continued to grow, driven by both EU and non-EU markets. However, geopolitical tensions had a significant impact on certain regions, with a marked decline in exports to the Middle East offset by growth in other markets such as Switzerland, China and the main European countries.

This month’s focus: The PNRR remains a driver of growth

The May edition of the Flash Economic Report focuses on the progress of the National Recovery and Resilience Plan (PNRR), which continues to be one of the main pillars supporting the Italian economy. The procedures put in place have now reached 98% of the Plan’s total resources, whilst expenditure has exceeded 113 billion euros. According to the Confindustria Research Centre, investments linked to the PNRR continue to represent the the main driver of our GDP growth.

The report also highlights that 2026 represents a decisive phase for the implementation of the Plan. By the end of August, 159 milestones and targets linked to the tenth instalment must be completed. Formally speaking, Italy remains one of the most advanced European countries in terms of implementation, having achieved over 72% of the targets set, whilst the coming months will be crucial for transforming financial commitments into concrete and lasting results for the country’s growth.