Economic Indicators

Italian companies see bleaker economic outlook-central bank survey


FILE PHOTO: A view shows Milan’s skyline during sunset in Milan, Italy, July 6, 2023. REUTERS/Claudia Greco/File Photo

 

MILAN (Reuters) – Italian companies’ views on the prospects for the economy darkened markedly in the third quarter, the Bank of Italy said in its quarterly survey on Tuesday, hit by uncertainty about the political and economic outlook and higher energy prices.

In the three months to September, the percentage of Italian businesses expecting worse economic conditions in the coming quarter rose to 37% from 23% in the previous survey.

Those expecting things to get better were down to only 4% from 13%, while 41% expected no improvement at all.

The euro zone’s third largest economy contracted by 0.4% in the second quarter from the previous three months, and most economists expect weakness to persist in the near term. The Italian government last month also cut its growth forecasts for this year and next.

The Bank of Italy’s poll — conducted between August 23 and September 13 among Italian industry and services companies with at least 50 employees — showed businesses expect inflation to fall further to 4.7% in 12 months’ time from 5.8% in the previous survey.

Over a two-year horizon, the expectation was for a 4.2% inflation rate, down from 5%.

Last month, Italian EU-harmonised consumer price inflation accelerated to 5.7% year on year from 5.5% in August.

The Bank of Italy survey is in line with other similar downbeat reports.

Italy’s manufacturing sector contracted last month for a sixth consecutive month, amid persistent declines in output and new orders, and the service sector fell marginally for a second month running.

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