Italian economy as of August 11, 2025

Italian Economy as of August 11, 2025: Inflation and Trade Balance in Focus

Inflation
On August 11, 2025, ISTAT will release the consumer price index (inflation). Updated June data show an annual increase of +4.3% and a monthly change of +0.2% compared to the previous month. Inflationary pressures remain elevated, but there are signs of slight easing compared to the spring months, mainly thanks to a slowdown in energy costs.

Trade Balance
On August 11, 2025, the Ministry of Economic Development will also publish the trade balance figures: currently, there is a surplus of +€10 billion in the first seven months of the year, with exports up +5% and imports contained at +2%. The surplus is supported by strong external demand, especially from Europe and the Middle East, while US flows appear more volatile.

Industrial Production and GDP Forecasts
Italian industrial production is recovering, with a +1% monthly and +3% year-on-year increase, indicating a solid foundation for growth. However, the GDP forecast for the full year remains moderate: both the Government and the Bank of Italy estimate growth at around +0.8%, held back by rising input costs and international tensions.

Impact of US Tariffs on Agri-Food and Wine

Recently increased US tariffs have hit non-EU agri-food products, including Italian wine. Wine exports to the US are now subject to an additional +15% tariff, reducing competitiveness and margins. However, the sector remains resilient thanks to geographic diversification (China, Canada, Japan) and premium segments, which are less price-sensitive.

Therefore:

• Agri-food (wine and traditional products): may slow toward the US, but remains resilient thanks to quality segments and alternative markets.

• Wider industry: greater focus on EU exports and emerging markets to offset protectionist effects.

Recommended ETFs: Bonds vs Equities

1. Euro Government Bond ETFs

• Underlying: Italian BTPs, German Bunds, French OATs

• Why: Provide stability, protection against Italian inflation (through inflation-linked bonds), and credit diversification. In a context of high inflation but still accommodative monetary policies, an ETF such as an Euro Inflation-Linked Government Bond ETF can help reduce volatility and preserve purchasing power.

2. Eurozone Corporate Bond ETFs

• Underlying: Investment-grade bonds from the euro area

• Why: Higher yield than government bonds with moderate risk. Useful if industrial recovery and exports sustain market confidence.

3. Sector Equity ETFs — Agri-food / Quality Consumer Goods

• Underlying: Italian and European food & beverage stocks, including wine and gourmet companies

• Why: Capture the value of “Made in Italy” and premium branding capability, offering growth potential despite temporary US tariffs.

4. Defensive European Equity ETFs (Utilities, Healthcare)

• Underlying: Defensive companies with stable cash flows

• Why: Protect from macro volatility, balancing the portfolio.

Suggested Strategy Based on the Macro Scenario

Euro Inflation-Linked Bond ETFs

iShares Euro Inflation-Linked Bond UCITS ETF (Ticker: IBEI)

• Underlying: Euro-denominated inflation-linked government bonds

• Key point: Inflation protection with adjusted coupon flows

• Indicative performance: Over the last 5 years to 2025, estimated total gain between +5% and +10% per year, with fluctuations linked to changes in real interest rates in Europe.

Amundi ETF Inflation-Linked Euro UCITS (Ticker: INFL)

• Similar to the above, with diversification across major euro area countries. Overall performance comparable, depending on the real rates environment.

Agri-Food, Food & Beverage ETFs

iShares STOXX Europe 600 Food & Beverage UCITS ETF (Ticker: FBEV)

• Underlying: STOXX Europe 600 Food & Beverage Index, including European food and beverage companies, such as wineries

• Indicative performance: Historically, between 2020 and 2024, this type of ETF achieved annual returns between +6% and +12%, thanks to resilience in crises and premium-driven growth.

Lyxor MSCI Europe Consumer Staples UCITS ETF (Ticker: CUST)

• Includes basic consumer goods companies, such as food producers. Between 2020 and 2024, annual returns averaged around +5%, with lower volatility than the broader equity market.

Comparison and Suggestions

Strategic Recommendations

• Inflation shield: Choose inflation-linked ETFs (IBEI or INFL) if you fear inflation returning above target.

• Made in Italy exposure (wine, food): A sector ETF like FBEV can leverage the value of the “Italian/European food & wine” brand, balancing growth and resilience.

• Defensive balance: The CUST ETF offers stability during economic uncertainty, containing volatility.

• Tactical mix: A multi-pronged strategy — combining inflation-linked ETFs for protection and sector equities for growth potential — can be effective in the current context: high inflation, global uncertainty, attractive agri-food exports.

In Summary
As of August 11, 2025, Italy shows mixed signals: inflation remains high but is gradually easing, the trade balance is in surplus, industrial production is growing, but GDP remains modest. US tariffs hit wine in particular, but the sector withstands thanks to premium positioning and alternative markets.

A diversified investment strategy — including bond ETFs (inflation-linked and corporate), sector equities in agri-food, and defensive equities — offers the right mix of returns, protection, and sector opportunities. This combination can effectively navigate short-term uncertainty while leveraging Italy’s economic strengths.