Italy business lobby lowers GDP forecast as U.S. tariffs loom

ROME (Reuters) -

Italy's main business lobby Confindustria on Wednesday cut its economic growth forecast for the country, warning that looming U.S. trade tariffs risked further worsening the outlook.

U.S. President Donald Trump was expected to unveil a comprehensive tariff plan later on Wednesday, amid fears among businesses, consumers and investors worldwide about an intensifying trade war.

Confindustria said it expected Italy's gross domestic product (GDP) to expand by 0.6% this year, just half the government's official 1.2% forecast and down from the 0.9% the association had estimated in October.

It predicted that GDP growth would pick up to 1% in 2026.

The euro zone's third largest economy expanded by a modest 0.7% in both 2024 and 2023.

It eked out growth of 0.1% in the fourth quarter of last year from the previous three months, after stagnating in the third quarter. Most analysts expect no significant pick-up in the near term.

Confindustria said that while its forecasts incorporated already-announced U.S. tariffs on steel and aluminium and what it called "record levels of uncertainty" on trade policy, they did not factor in the effects of an escalating trade war.

In a worst case scenario, with permanent 25% U.S. tariffs on all imports, rising to 60% for China, and retaliatory measures against U.S. exports, Italy's GDP growth would fall to around 0.2% in 2025 and 0.3% in 2026, Confindustria said.

The group said pharmaceuticals, autos, other vehicles and machinery were the industrial sectors most reliant on sales to the U.S., which last year was Italy's second-largest export market after Germany.

The most recent forecasts by the International Monetary Fund and the Organisation for Economic Cooperation and Development both envisage Italian growth of 0.7% this year.

(Reporting by Alvise Armellini, editing by Gavin Jones)