Should tensions in the Middle East show further signs of easing over the coming months, global oil markets would certainly not normalise overnight, but price pressures should start to ease, making the inflationary shock scenario look more transitory than lasting. Inflation is nonetheless expected to peak towards year-end, translating into a rise of 2.6% over 2026, well above the disinflationary trend of the past two years. Under a milder shock scenario, growth for 2026 has naturally been revised upwards, from 0.3% in the April scenario to 0.5% today. The second and third quarters should still bear the weight of the US-Iran standoff and its effect on confidence, together with elevated inflation and the onset of monetary tightening. Growth over this period is likely to be flat, if not negative, which is why the annual forecast falls below the carry-over.

Consumption, which regained some colour early in the year, is likely to suffer as a result, at least in 2026, leaving a negative carry-over into 2027. Were the labour market to keep supporting household disposable income, signs of cracking after three years of sluggish growth could still translate into a slight rise in unemployment next year. Unemployment would nonetheless remain at a historically low level in 2026.

The investment growth cycle, which has carried much of the resilience of the past two years, could gradually fade. The recent combination of monetary easing, well-received government incentives and early returns on transition-related investment is likely to lose steam over time. The cycle should still be underpinned by the National Recovery and Resilience Plan (PNRR), which, before drawing to a close, will keep fuelling public investment in 2026 and, to a lesser extent, in 2027.