Italy Consumer Morale Drops to Lowest Level Since 2023

Consumer confidence in Italy plummeted to its lowest level in nearly two and a half years this March, as geopolitical instability weighed heavily on the national outlook. Data released on Thursday by the national statistics institute, ISTAT, showed the consumer confidence index dropped sharply to 92.6 from 97.4 in February. This figure fell significantly short of the 95.5 median forecast previously estimated by analysts. The decline follows a period of heightened international tension involving a United States-Israel military action against Iran. While consumer sentiment soured, business morale remained relatively resilient. The composite business morale index, which tracks the manufacturing, retail, construction, and services sectors, saw a marginal decrease to 97.3 from 97.4 the prior month. Notably, the manufacturing sub-index showed a slight improvement, rising to 88.8 from 88.5. Economic forecasts for the region are being revised downward. The primary business lobby, Confindustria, reduced its growth projection for the Italian economy to 0.5% for the current year, down from an earlier estimate of 0.7%. The group cited significant downside risks should the conflict involving Iranian territories persist. This economic pressure arrives at a challenging time for the government, following a recent referendum defeat regarding justice system reforms. Despite the current dip in sentiment, recent historical data shows modest resilience. The economy grew by 0.3% in the final quarter of last year and 0.8% on a year-on-year basis. However, the broader trend remains sluggish, with gross domestic product rising only 0.5% in 2025, marking the third consecutive year of growth below the 1% threshold. The government is expected to release updated economic targets next month.