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.
In his annual address to the Italian Banking Association, Governor Fabio Panetta of the Bank of Italy highlighted the economic and financial landscape facing uncertainty and innovation in 2026. Two forces were shaping the global economy: the Middle East conflict-induced energy price surge, coupled with supply chain concerns, and the rapid proliferation of artificial intelligence (AI).
The impact of these forces varied across the world. The United States, with less exposure to energy shocks and a robust ability to innovate, reaped benefits. Conversely, China, driven by manufacturing and technology exports, struggled with its dependence on imported energy. The euro area, already grappling with low growth, faced compounded challenges from higher energy costs.
AI's contribution to investment in the euro area lagged behind other regions. Post-conflict, household confidence waned, and service firms' outlook dimmed. Currently, inflation sits at around 3%, expected to persist above this level until early 2027. Despite diversifying energy sources and suppliers, the euro area remains susceptible to sudden spikes in gas and oil prices, particularly for nations reliant on fossil fuel imports.
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