Fabio Panetta: The economic and financial system amidst uncertainty and innovation
Speech by Mr Fabio Panetta, Governor of the Bank of Italy, at the annual meeting of the Italian Banking Association (ABI), Rome, 15 July 2026.
1. The international economy
The global economy is in a period of transition, shaped by two opposing forces. The first is the shock triggered by the conflict in the Middle East, which has led to higher energy prices, heightened uncertainty and renewed concerns about supply chain bottlenecks. The second is the spread of artificial intelligence, which is bolstering investment, trade in high-tech goods and services, equity market valuations and, through the latter, household wealth and consumption.
These two forces are playing out differently across the world. The United States benefits from its lower exposure to energy shocks and from its strong capacity to develop and deploy new technologies. In China, growth is supported by manufacturing and technology exports but remains constrained by the country's reliance on imported energy.
In the euro area, higher energy costs have compounded a situation already marked by low growth. Diversification of energy sources and suppliers has made the euro area less vulnerable than in the past, but sudden increases in gas and oil prices continue to weigh on economies that still depend on imports of fossil fuels. The contribution of artificial intelligence to investment is more limited than elsewhere.
In the months following the outbreak of the conflict, household confidence deteriorated and the outlook for service firms weakened. Inflation is currently hovering around 3 per cent and is expected to remain above that level until early 2027.