The third quarter is off to a bad start. The war in Iran reignited in July and uncertainty over future developments is at its peak: the price of oil was immediately affected. Having already slowed Italian GDP in the second quarter, the impacts of the war are now extending into the third quarter as well. This is what can be read in the flash economic report from the Confindustria Research Centre. "Inflation will remain high for some time," the report explains, "and the credit channel is tightening. Industry is losing ground after months of shocks, investment is slowing. Services are stabilising, thanks to the rapid recovery of foreign tourism, but are not growing."
"The drop in inflation in June (+3.0%) should not be misleading: it has always been a 'sticky' phenomenon, and moderation will not be instantaneous: in 2023, Italian inflation took 12 months to fall from +12.0% to +1.0%. Furthermore, even with transitory inflation, the step up in price levels remains and exerts negative effects on GDP." This is highlighted in a focus on inflation contained in the economic report.
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