Businesses expect the overall economic situation to worsen, as uncertainty and concerns over the effects of U.S. trade policies weigh heavily

In the first quarter of 2025, the valuations of worsening both of the economic situation current general and their short-term operating conditions. And companies’ prospects for the current year are weighed down by uncertainty and concerns arising from the direct or indirect effects of U.S. trade policies. This is what emerges from the survey of Bank of Italy on inflation expectations among Italian industrial and service companies with at least 50 employees, on a sample expanded from 1.500 to 2.500 units in this edition. 

The Bank of Italy survey was conducted between February 21 and March 19, therefore before Trump’s decision on duties, even if the concern was already evident and reflected in the responses of the entrepreneurs interviewed, so much so that according to the study, Business inflation expectations they rose across all forecast horizons, although remaining below 2%.

Business: the outlook for 2025

In the first quarter of 2025, the balance between assessments of improvement and deterioration of the country’s general economic situation, negative since the beginning of 2022, deteriorated further (to -30 percentage points, from -25 in the previous survey). Assessments worsened especially among service companies (to -29 from -19) and, in construction, among companies that operate mainly in the residential sector; the balance remained stable, at low values, in industry in the strict sense (-32 points).

Business prospects for 2025 are weighed down by fears over the effects of US trade policies, the survey underlines.

for sales carried out in the previous quarter, the negative balance between the opinions of increase and reduction has narrowed (to -1 from -4), reflecting a decline in services (to -2 from 4) and in construction, where it remains very positive (to 20 from 23), compared to a sharp increase in industry (to -4 from -16). The share of companies that expect an expansion of sales in the second quarter exceeds that of those who foresee a contraction: the balance is 22 percentage points in industry in the strict sense (from 10 in the previous survey), 24 in services (from 16) and 32 in construction (from 35). 

The Via Nazionale survey also reveals that the second quarter of the year is also expected to see an expansion in’employment in all sectors, with overall modest wage increases. In the construction assessments on demand and operating conditions remain better than in the rest of the economy, but the activity of companies operating mainly in the residential sector has slowed down.

Although the conditions for investment are still considered unfavourable, companies expect a increase in nominal spending for investments in 2025 in line with that forecast in the previous survey. Assessments on access to credit are stable and the liquidity position is considered satisfactory overall.

Businesses: Inflation on the rise but below 2%

I price lists practiced by companies over the past 12 months, they have grown at a marginally faster pace in industry and have slowed in services and construction; over the next 12 months, price growth is expected to remain moderate overall. Business expectations for consumer price inflation have increased across all forecast horizons, but remain below 2 percent.
In detail, consumer price inflation expected by companies has slightly increased across all forecast horizons, averaging 1,8% at 6 and 12 months (from 1,4 and 1,5%, respectively) and 1,9% at 24 and 48 months (from 1,5 and 1,6). Expectations remain homogeneous among companies of different sectors and sizes and in different areas of the country, Bankitalia underlines.