Italy's Budget Watchdog, UPB, expects the Middle East conflict to reduce GDP by 0.2-0.4ppts in 2026 and 2027

The expectation of a GDP reduction by 0.2-0.4 percentage points in Italy for 2026 and 2027 due to the Middle East conflict suggests economic vulnerability tied to geopolitical events. This could have implications for Italy's fiscal outlook and potentially impact broader EU growth projections. Watch for reactions in bond yields and consumer-related sectors as the forecast may necessitate shifts in economic policy or sentiment.