The central bank of Italy, the eurozone’s third-largest economy, has cut its growth forecast for next year due to pressure on exports from global trade tensions.
According to the latest forecast released by the Bank of Italy on Friday, the country’s gross domestic product (GDP) is expected to grow by only 0.6% next year, down from the previous forecast of 0.8%. The institution still predicts that this year’s GDP growth will be 0.6%, higher than the government’s latest forecast of 0.5%, and the GDP growth in 2027 will be 0.7%.
The Bank of Italy said that after three consecutive quarters of contraction, the Italian economy may see “moderate” growth in the third quarter, but did not provide more detailed estimates. The rebound is in line with analysts’ forecasts surveyed by Bloomberg, who expect the Italian economy to grow by 0.1% in the third quarter.
The Bank of Italy stated in its report: “Investment has picked up again thanks to more favorable financing conditions, tax incentives and measures related to the National Recovery and Resilience Plan. At the same time, consumption has also increased slightly, driven by enhanced household confidence and the resilience of labor income. Activity in the service and construction sectors has increased, while manufacturing activity remains weak.”
The Italian cabinet recently approved a budget that projects a deficit of only 3% of GDP this year, paving the way for Prime Minister Giorgia Meloni’s government to exit the EU’s excessive deficit procedure. However, the government’s growth forecast has been revised down to 0.5%, and debt levels are expected to remain well above 130% in the foreseeable future.
This makes it more difficult for Meloni to fulfill her promise of tax cuts to voters while continuing to reduce the deficit and meet other commitments, including increasing defense spending. To meet US President Donald Trump’s demands, Italy has agreed to adhere to NATO’s target of spending 5% of its GDP on defense.
Technical analysis:
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Gold: The inertia decline of gold prices on Friday reappeared, and then began to stabilize and stop falling near 4200. Within the day, we focus on the resistance performance near 4290. If it recovers, we continue to capture the pullback buying after the momentum breakthrough. Additionally, we also prepare for the defense of low-sweep liquidity near 4220/30. If there is a sweep, at least attempt one long position. For detailed positions, please consult the plugin.
(Gold 15-minute chart)
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Nasdaq: The yellow low-sweep liquidity area we alerted last Friday through our plugin was highly effective. After the price dropped below 24,253, it rebounded significantly. Meanwhile, after the blue area broke through 24,750, there was a clear pullback confirmation followed by another rise. For today’s trading, we suggest that long positions be reduced and protective measures taken on Friday, and then held. For new positions, pay attention to the rebound signal after the intraday low-sweep at around 24,800/24,750. For detailed positions, please consult the plugin.
(NASDAQ 15-minute chart)
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Crude oil: Keep an eye on the demand zone near 56.70 within the day and consider a buy limit order. Also, watch for the price to recover above the 58 level. If successful, a break and pullback buy can be attempted. For detailed positions, please consult the plugin.
(Crude Oil 15-Minute Chart)
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Today’s key economic data and events to focus on:
14:00 Germany September PPI Monthly Rate
22:00 US Conference Board Leading Index for September (MoM)
