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Italy's business lobby lowers its GDP forecast as U.S. Tariffs loom

Italy's business lobby lowers its GDP forecast as U.S. Tariffs loom

Confindustria, the main Italian business lobby, cut its forecast of economic growth for the country on Wednesday. It warned that the looming U.S. tariffs could further deteriorate the outlook.

The U.S. president Donald Trump is expected to announce a comprehensive tariff policy later on Wednesday amid concerns among investors, businesses and consumers about escalating trade tensions.

Confindustria forecast that Italy's Gross Domestic Product (GDP) would grow by 0.6% in 2018, half of the official government forecast of 1.2% and lower than the 0.9% estimate the association made in October.

It was predicted that the GDP would grow to 1% by 2026.

The third largest economy in the euro zone expanded modestly by 0.7% both in 2024 and 2023.

After stagnating for the third quarter, it managed to grow by 0.1% from the previous quarter in the fourth. Analysts expect little improvement in the short term.

Confindustria stated that, while it incorporated tariffs announced by the United States on steel and aluminum and "record levels" of uncertainty on trade policy and referred to as "record-levels of uncertainty", its forecasts did not take into account an escalating war of trade.

Confindustria stated that in a worst-case scenario with tariffs of 25% on all imports from the U.S., increasing to 60% in China, as well as retaliatory actions against U.S. exported, Italy's growth in GDP would be reduced to 0.2% by 2025, and to 0.3% by 2026.

The group stated that pharmaceuticals, automobiles, and other vehicles, as well as machinery, were the industries most dependent on sales to the U.S. which was Italy's largest export market last year after Germany.

Both the International Monetary Fund and Organisation for Economic Cooperation and Development have forecast a 0.7% growth in Italy this year. (Reporting and editing by Gavin Jones, Alvise Armellini)

(source: Reuters)