In response to increased uncertainty, particularly linked to U.S. tariff policies, Prime Minister Giorgia Meloni's government has sharply reduced its 2025 economic growth forecast from 1.2% to 0.6%, a significant downgrade made in April.

Despite the decline in consumer confidence, business morale in Italy remained stable at 93.6 in August, with positive momentum in the services sector offsetting declines in manufacturing, retail, and construction.

Italy's economy unexpectedly contracted by 0.1% in the second quarter, indicating an economic slowdown, with detailed GDP components to be released later.

Manufacturing sentiment showed a slight decrease to 87.4 from 87.8, but remained above the forecast of 87.2, suggesting mixed sectoral performance amid broader economic challenges.

Italy's consumer confidence declined more than expected in August, dropping to 96.2 from 97.2 in July, which is below the forecast of 96.6, signaling a worsening sentiment among Italian consumers.

This decline in consumer sentiment reflects broader economic concerns, although specific causes or consequences are not detailed in the available data.