Italian Economic Outlook: Credit Growth, Fiscal Concerns, and SME Challenges
Recent data indicates a positive trend in Italian credit growth, with a rise of 6.1% on an annual basis as of june. This represents an increase of six tenths of a point compared to the previous June and a important jump of almost three percentage points from the end of 2024. The growth is observed across both family and business loans and is linked to increasing credit demand.
However, this positive growth is tempered by broader economic uncertainties. Marco Elio Rottigni, Director of the Italian Banking Association (ABI), cautioned about a challenging economic context marked by geopolitical instability and the introduction of trade duties. These factors are expected to negatively impact international trade and overall GDP growth, with the International Monetary Fund forecasting a slowdown. Rottigni highlighted the potential for trade tensions to disrupt supply chains, further hindering economic expansion, a concern reflected in the rising value of credit default swaps on sovereign bonds.
Adding to these concerns, ABI representatives have voiced anxieties regarding the impact of the latest goverment maneuver on the banking sector. The maneuver introduces a complex set of fiscal measures that, while generating an overall increased revenue of approximately 9.6 billion euros for banks over the 2026-2029 period, will also result in lost revenues of 800 million euros by 2030. This loss stems from deferrals in the deductibility of loan write-downs and limitations on the deductibility of tax losses and ACE surpluses. Rottigni explained that this deferral effectively reduces banks’ interest margins and represents a missed chance for financial gains – estimated at around 800 million euros – had the liquidity been invested,for exmaple,in public debt securities.
Meanwhile, small and medium-sized enterprises (SMEs) are expressing concerns that the maneuver offers insufficient support. Confimi Industria, representing SMEs, described the measures as “timid” and inadequate to fully address the challenges facing the sector. Fabio Ramaioli, General Director of Confimi industria, emphasized the urgent need for structural interventions to address the high cost of energy, advocating for a review of excise duties, decoupling of gas and electricity prices, and long-term supply policies to restore competitiveness.
confimi Industria also highlighted a concerning trend of contraction within the Italian manufacturing sector,with a significant decline in the number of companies from 744,000 in 1995 to 497,000 today. Traditional sectors like wood-furniture, textiles, paper, and electronics are particularly vulnerable, while even more capitalized sectors like mechanics are facing difficulties.
