Stronger-than-expected global growth, yet exposed to new energy-related fragilities, while Italy confirms its resilience but remains constrained by weak productivity, energy dependence and delays in innovation
Abstract: The Governor of the Bank of Italy’s Final Considerations on the 2025 Annual Report portray a global economy marked by a profound contradiction: on the one hand, growth exceeded expectations, supported by the United States, China, monetary easing, and the momentum of investment linked to artificial intelligence; on the other, the outlook deteriorated rapidly as a result of geopolitical tensions, the conflict in the Persian Gulf, rising energy prices, financial market fragility, and the persistence of global imbalances. In 2025, international trade showed robust momentum, but it was increasingly shaped by geographical realignments, tariff barriers, Chinese competition, and goods linked to the technological transition. Within this context, Italy presents an ambivalent trajectory: since 2019 it has shown significant resilience, supported by investment, exports, employment, and an improvement in its net external position; however, in 2025 growth weakened, stopping at 0.5%, while the issues of productivity, energy dependence, the need to accelerate innovation, training, the adoption of artificial intelligence, and the quality of public action remain central. The Bank of Italy’s analysis shows that future growth will depend not only on the economic cycle, but on the ability to transform crises and transitions into structural reforms, productive investment, and greater social and economic resilience.
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OTHER CONTRIBUTIONS ON THE GOVERNOR’S 2026 FINAL CONSIDERATIONS
Stronger-than-expected global growth, but less solid than it appears
The Governor of the Bank of Italy’s Final Considerations, presented at Palazzo Koch on the occasion of the Annual Report for 2025, open with an apparently reassuring figure: in the previous year, the global economy showed greater momentum than expected, with gross domestic product growing by 3.4%, half a percentage point above the initial forecasts. This expansion occurred despite the continuation of the conflicts in Ukraine and Gaza, the tightening of United States tariff policies, and the progressive deterioration of the Middle Eastern scenario, demonstrating a capacity to absorb shocks which, however, must not be mistaken for a condition of structural stability (Bank of Italy, 2026a).
United States growth, above 2%, was also supported by the momentum generated by artificial intelligence, as the construction of data centres fuelled investment, while the rise in the share prices of companies at the forefront of technological transformation increased financial wealth and supported consumption. China, for its part, made a significant contribution to global expansion with growth of 5%, but within a fragile model, in which weak domestic demand was offset by lower prices on foreign markets and by the diversification of export destinations, a strategy that is effective in the short term but likely to fuel domestic deflationary pressures and renewed protectionist responses (Bank of Italy, 2026a).
The global picture outlined by the Bank of Italy therefore appears to be marked by a dual tension: growth exists, but rests on foundations that are not fully balanced; technological innovation generates investment and financial wealth, but risks accentuating industrial and financial concentration; trade continues to expand, but within an increasingly fragmented geography, in which exchanges are no longer driven solely by the logic of economic efficiency, but also by security, strategic autonomy, and geopolitical competition.
The return of the energy shock and the fragility of globalization
The international situation described by the Governor was radically altered by the conflict in the Persian Gulf and by the blockade of the Strait of Hormuz, through which a significant share of global oil and liquefied natural gas supplies normally passes. This geopolitical development caused supply shortages, sharp increases in energy commodity prices, and a deterioration in economic prospects, confirming how global interdependence, when not accompanied by adequate resilience strategies, can rapidly turn into systemic vulnerability (Bank of Italy, 2026a).
Oil prices rose across all geographical areas, reflecting the high degree of integration of global production and distribution chains, while in the more fragmented gas market the impact was more differentiated: Europe and Asia, being more dependent on imports, experienced significant increases, whereas in the United States abundant domestic production and infrastructural constraints on exports limited the transmission of international tensions to domestic prices. The energy crisis therefore does not affect all economies uniformly, but accentuates the differences between exporting and importing economies and between production systems with different capacities to absorb shocks.
Particularly relevant is the extension of price pressures to essential raw materials, including fertilizers, whose increases may have more intense effects on food prices only after the completion of sowing and harvesting cycles. In this respect, the Bank of Italy highlights the risk of worsening food insecurity, especially in low-income countries, where rising prices of essential goods may push tens of millions of people into extreme poverty. The economic datum thus immediately assumes a social dimension: energy and food inflation is not merely a variation in prices, but a regressive redistribution of the costs of crises onto the most vulnerable people and territories.
Inflation, interest rates, and financial risk
The rise in consumer prices and short-term inflation expectations has reopened the question of the response of central banks, which are required to navigate a difficult balance between controlling inflation and protecting growth. Only a few years after the inflationary shock that followed the pandemic, the expectation of a timely response from monetary authorities has accentuated the rise in interest rates across all maturities, tightening financial conditions precisely while households and firms are experiencing the erosion of disposable income and the compression of margins (Bank of Italy, 2026a).
According to the projections referred to by the Bank of Italy, even in the event of a rapid resolution of the conflict, the International Monetary Fund expects global growth to slow to 3.1% in 2026 and inflation to reach 4.4%, almost one percentage point higher than the estimates formulated the previous year. The scenario would become significantly worse if the conflict were to persist, since damage to energy infrastructure, transport and insurance costs, and uncertainty over supplies would continue to weigh on the planning of households and firms, restraining consumption and investment (Bank of Italy, 2026a).
The Bank of Italy also highlights a risk of financial amplification: at the outbreak of the conflict, investors shifted towards assets considered safe, with an appreciation of the dollar, an increase in risk premia, and capital outflows from emerging markets. The subsequent recovery in stock prices may be read as a sign of confidence, but also as a possible underestimation of the economic effects of the crisis, especially when compared with the sharp increase in long-term interest rates in G7 countries. The financial outlook therefore remains fragile, because the combination of high public debt, vulnerabilities in non-bank intermediation, and geopolitical shocks can transform circumscribed events into cascading effects.
International trade between resilience and fragmentation
In 2025 international trade showed stronger-than-expected momentum, growing by 5%, supported by the geographical reorientation of trade flows, which made it possible to partly circumvent trade barriers, and by the application of United States tariffs lower than those initially announced. A particularly significant element is the role of goods linked to artificial intelligence, which accounted for about half of the increase in global merchandise flows, confirming that the technological transition has now entered not only production processes, but also the material structure of world trade (Bank of Italy, 2026a).
Protectionist policies, however, did not correct the imbalances they claimed to address. The United States deficit in goods trade remained unchanged as a share of GDP, while a significant portion of the burden of tariffs fell on American consumers and firms. At the same time, China strengthened its commercial presence on a global scale, recording very large surpluses and confirming the ability of its firms to adapt rapidly to trade barriers through price reductions, market diversification, and public support for manufacturing (Bank of Italy, 2026a).
World trade, however, risks weakening. According to the International Monetary Fund, the persistence of high trade barriers could reduce the growth of global trade to below 3% in 2026, while the conflict in the Persian Gulf could further accentuate the slowdown. From this perspective, the problem is not merely the quantitative reduction in trade, but the qualitative transformation of globalization: from a space of economic integration into a field of strategic competition, in which value chains are reorganized according to criteria of security, technological dependence, access to raw materials, and control over critical infrastructure.
Global imbalances and the limits of fragmentation
The Report recalls a fundamental contradiction: concerns over economic security and strategic autonomy lead governments to reduce dependence on foreign sources and to protect essential sectors, but if these objectives are pursued through indiscriminate market fragmentation, the result may be higher costs, weaker production chains, reduced incentives for cooperation, and the impairment of citizens’ welfare. The previous form of globalization cannot simply be restored, but neither can it be replaced by disorderly closure (Bank of Italy, 2026a).
The multilateral system built after the Second World War, although imperfect and at times unbalanced, fostered integration and economic growth for eight decades; its strength did not lie in eliminating conflicts between countries, but in bringing them within shared rules. Today that system appears eroded by asymmetric applications of rules, distortive industrial policies, persistent macroeconomic imbalances, and an unequal distribution of the benefits of integration. In a deeply interconnected world, fragmentation does not eliminate imbalances, but shifts them, conceals them, and makes them more costly to correct.
The Governor observes that in 2025 international current account balances widened, reaching their highest level since the global financial crisis. The United States accounts for a significant share of the global deficit, while a substantial portion of the surplus is attributable to China and, to a lesser extent, Europe. These imbalances reflect different economic models: in the United States, the high public deficit and low household savings fuel the deficit; in China, the surplus reflects a growth model that compresses consumption and stimulates exports; in Europe, the surplus signals the chronic difficulty of transforming savings into innovative investment (Bank of Italy, 2026a).
The Italian economy: significant resilience, but diminished momentum
Within the international framework just described, Italy presents a complex trajectory. Since 2019 the Italian economy has shown significant resilience: despite the pandemic and the 2022 energy shock, gross domestic product has grown by more than 6%, a result in line with the euro area average in aggregate terms and higher on a per capita basis. The expansion was driven by investment, supported by exports, and accompanied by a significant increase in employment; the net external position also improved, moving from a substantially debtor position to a creditor position equal to 15% of GDP (Bank of Italy, 2026a).
These results were supported by prudent management of public finances, which strengthened investor confidence and prevented international shocks from turning into large-scale domestic crises. However, the Report emphasizes that, more recently, momentum has weakened: the deterioration of the geopolitical framework, the tightening of United States trade policies, and the difficulties of the German economy, the main destination market for Italian exports, weighed on economic activity, while domestic demand was restrained by the modest dynamics of disposable income and the loss of purchasing power of wages.
In 2025 Italian GDP increased by 0.5%, less than the euro area average, and the conflict in the Persian Gulf weakened already fragile prospects. According to the projections cited by the Bank of Italy, economic activity could remain weak in the coming months and, under the most adverse scenarios, stagnate or contract. The resilience shown in previous years must therefore not be confused with a guarantee of future growth: Italy has resisted better than many expected, but remains exposed to structural constraints that require deep intervention.
Productivity, competitiveness, and demography
The central issue for the Italian economy remains productivity. The Bank of Italy observes that, without a decisive increase in productivity, the country risks remaining anchored to structurally modest growth rates. Since the beginning of the century, output per hour worked in the non-financial private sector has grown in Italy by only 6%, compared with increases ranging between 13% and 34% in the other major euro-area countries. This gap is not merely a technical figure, but the measure of an economic and social fragility: low productivity means weaker wages, lower investment capacity, reduced competitiveness, and narrower margins to sustain welfare, innovation, and the ecological transition (Bank of Italy, 2026a).
Demography makes this challenge impossible to postpone. With the working-age population sharply declining, Italy will not be able to rely steadily on an increase in employment to sustain development; it will therefore have to produce more and better with a potentially smaller workforce, increasing human capital, innovation, organizational quality, and the technological intensity of production processes. Productivity thus becomes not only an economic objective, but a condition for the country’s social sustainability.
The issue of competitiveness also risks returning to the centre of attention. Italian exporters’ presence remains limited in Asian markets, which are destined to become the main drivers of global demand, while Chinese competition is increasing pressure even in technologically advanced manufacturing sectors. Italy retains significant strengths in machinery, pharmaceuticals, and high-quality production, but these strengths can be fully exploited only through investment, innovation, training, and the ability to enter the most dynamic value chains.
Investment, the NRRP, and the quality of public action
The recovery in investment represents one of the main positive discontinuities of recent years. The increase involved not only construction, but also machinery and intangible assets, which are essential components for growth prospects. The public contribution was significant: between 2021 and 2025, interventions under the National Recovery and Resilience Plan exceeded 100 billion euros, accounting for 30% of total capital accumulation (Bank of Italy, 2026a).
The subsequent revisions of the Plan adapted its objectives to the complexity of implementation, scaling down or replacing some projects and recalibrating certain reform objectives. These adjustments may be considered partly physiological for a programme of this scale, but the decisive issue remains the ability to turn expenditure into lasting productive capital. The NRRP cannot be assessed solely by the volume of resources absorbed, but by the quality of the investments carried out, the effectiveness of the reforms, and the ability to affect the structural constraints on Italian growth.
From this perspective, the quality of public action becomes a decisive economic variable. A public administration capable of designing, implementing, monitoring, and evaluating investments can multiply the effects of European resources; conversely, inefficient spending risks leaving behind only debt and works lacking real transformative capacity. Italian growth therefore also depends on institutional quality: administrative timelines, technical skills, coordination between levels of government, procedural simplification, and the ability to orient public demand towards innovation and productivity.
Artificial intelligence and the question of adoption
The Report assigns artificial intelligence a strategic role, as previously examined, not as a mere technological phenomenon, but as a possible lever to relaunch the productivity of the Italian economy. The potential of AI, however, will not materialize automatically: it will depend on its degree of diffusion among firms, starting with small and medium-sized enterprises, and on the ability to integrate it into production processes. In Italy, according to the data cited by the Bank of Italy, in 2025 16% of firms with ten or more employees used at least one artificial intelligence tool, compared with 20% of the European average and 26% in Germany (Bank of Italy, 2026a).
The figure shows that Italy is not foreign to the technological transition, but is still participating with a significant delay. This delay is particularly delicate because the Italian production system is largely composed of small and medium-sized enterprises, often highly specialized but not always endowed with sufficient organizational capital, digital skills, and data infrastructure to adopt AI in a transformative way. The risk is that technology will strengthen already more structured firms and leave behind those that would most need innovation in order to recover productivity.
The Bank of Italy identifies several essential conditions: supporting the creation and growth of innovative firms, strengthening venture capital and private equity, using the State as a primary buyer of innovation in sectors such as health, energy, security, and mobility, spreading AI within public administrations to increase efficiency and service quality, facilitating access to computing infrastructure, promoting the secure sharing of data along supply chains, and building a clear regulatory framework capable of protecting firms and citizens without stifling experimentation (Bank of Italy, 2026a).
Human capital, training, and inequalities
The technological transition places the issue of skills at the centre. The Bank of Italy emphasizes that without qualified human resources even the most advanced technologies produce limited benefits, and that innovation does not automatically reduce inequalities; on the contrary, in the absence of widespread skills it may widen them, rewarding those able to use it and leaving behind those who remain excluded (Bank of Italy, 2026a).
In Italy these risks are increased by structural weaknesses in training and in the valorisation of human resources. The share of thirty-year-olds with a university degree has more than doubled since the beginning of the century, but remains lower than in the other main European economies; among young people without a degree, one in five is neither studying nor working; the returns to tertiary education remain limited, while a growing share of young graduates move abroad in search of full recognition of their skills. Between 2020 and 2024, according to the Bank of Italy, more than 100,000 young graduates left the country (Bank of Italy, 2026a).
Human capital is therefore not an accessory chapter of economic policy, but the very foundation of innovative capacity. The skills required to govern artificial intelligence are not only technical and scientific, but also include supervisory capacity, critical judgement, interpretation of results, and integration between technological and humanistic knowledge. Lifelong learning becomes essential to adapt the skills of workers most exposed to the technological shock and to prevent the digital transition from turning into a new social divide.
Energy and Italian vulnerability
The conflict in the Persian Gulf has once again made Italy’s dependence on energy imports evident. For a particularly exposed economy, higher energy prices imply a transfer of resources abroad, reduce households’ disposable income, weaken firms’ competitiveness, and restrain growth. The Report shows that in 2025 unit electricity costs in Italy were above the European Union average for households, firms with intermediate consumption, and energy-intensive firms (Bank of Italy, 2026a).
Italy’s energy dependence must therefore be reduced through three directions: energy efficiency, development of renewable sources, and strengthening of networks. Between 2019 and 2024, the energy used per unit of gross domestic product fell by 15%, in line with the European average decline; the share of electricity consumption covered by renewable sources rose from 35% to 41% in 2025, but the increase in the European Union was broader. Transmission and storage networks must be strengthened in order to fully exploit renewable energy production, while new nuclear technologies deserve, according to the Bank of Italy, careful assessment (Bank of Italy, 2026a).
Temporary support measures for households and firms may be necessary in critical phases, but they do not replace structural interventions. Only by accelerating the energy transition will Italy be able to reduce its dependence on foreign sources on a lasting basis and prevent new shocks from once again affecting incomes, competitiveness, and growth. Here too, the economic issue assumes a social dimension: expensive energy means more vulnerable households, less competitive firms, weaker real wages, and reduced margins for investment.
Banks, credit, and financial stability
In the framework outlined by the Governor, Italian banks are facing the current phase from a position of solidity. Profitability and capitalization are high, and the ratio between market value and book value is among the highest in Europe. However, progress is not uniform: the largest banks are recording very positive results, while it remains essential to preserve competition, especially in local markets, where households and small firms often have access to a limited number of financial counterparts (Bank of Italy, 2026a).
The recovery in lending to firms, favoured by the reduction in the cost of credit, has been concentrated among higher-quality firms, both large and small. This is important because it signals an improvement in financial conditions, but also the risk that more fragile firms may remain excluded from the recovery in credit. In an economy that must invest in innovation, energy, human capital, and technology, the financial system has the task of allocating resources towards productive, sustainable projects capable of generating growth.
Banking mergers, both national and cross-border, can help strengthen the European banking market and make intermediaries more solid and efficient, but their value will depend on their ability to support the real economy, offer better services at contained costs, and avoid weakening competition. Financial stability is therefore not an end separate from growth, but a condition for financing investment, innovation, and resilience.
An open conclusion: growth as a political and institutional choice
The Governor of the Bank of Italy’s Final Considerations present a picture in which the global and Italian economies are crossed by the same tension: growth exists, but it is not guaranteed; technology opens opportunities, but can widen inequalities; interdependence remains necessary, but must be governed; Italian resilience is real, but not sufficient to offset long-term structural weaknesses.
For the global economy, the central problem is to prevent the search for economic security from degenerating into permanent fragmentation, because a more closed, more costly, and less cooperative global system risks reducing collective welfare without eliminating the imbalances it claims to correct. For Italy, the challenge is to transform the resilience shown in recent years into structural growth, addressing the issue of productivity, strengthening human capital and innovation, accelerating the energy transition, and improving the quality of public action.
The message emerging from Palazzo Koch is clear: it is not enough to withstand shocks; they must be transformed into opportunities for reorientation. Future growth will not depend solely on the international cycle, but on the ability of institutions, firms, and society to build an economy that is more productive, more innovative, more autonomous in energy terms, and more capable of including people in the technological transition. From this perspective, the economy is not merely the calculation of aggregate magnitudes, but a civil project: the way in which a community decides to use resources, knowledge, labour, and institutions to make the future less fragile.
NOTES
Bank of Italy. (2026a). The Governor’s Final Considerations on 2025. Annual Report for 2025 – 132nd financial year. Rome: Bank of Italy.
Bank of Italy. (2026b). Annual Report for 2025. Rome: Bank of Italy.
Bank of Italy. (2026c). Annual Report for 2025 in brief. Rome: Bank of Italy.
Bank of Italy. (2026d). Annual Report on sustainable investments and climate-related risks for 2025. Rome: Bank of Italy.
Eurostat. (2026). Statistics on energy prices, digitalisation and enterprise use of artificial intelligence. Luxembourg: Eurostat.
International Monetary Fund. (2026). World Economic Outlook. Global Economy in the Shadow of War. Washington, DC: International Monetary Fund.
Panetta, F. (2026). The Governor’s Final Considerations on 2025. Rome: Palazzo Koch, Bank of Italy.
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