Governor of the Bank of Italy Calls for Innovation and Warns Against Trade Fragmentation

During his speech at the annual gathering of market operators Assiom Forex, the Governor of the Bank of Italy, Fabio Panetta, presented an optimistic, yet warning-filled vision of the economy. He noted that global trade did not collapse as forecast a year ago, thanks to technological innovations and corporate flexibility. Panetta expressed conviction that a complete rupture of ties between the USA and its historical allies is unlikely due to the systemic role of the American economy. At the same time, he criticized protectionist tendencies, pointing out that multilateralism remains the best defensive strategy. The governor noted that economic decisions are increasingly dictated not only by efficiency but also by security strategy. Since the energy crisis triggered by Russia's invasion of Ukraine in 2022, European Union countries have been striving for strategic autonomy, which requires a deep restructuring of supply chains and energy markets.Regarding Italy's internal situation, Panetta emphasized that the country in recent years has recorded GDP growth close to the EU average, which breaks decades of stagnation, although forecasts for 2026 indicate a risk of renewed slowdown below EU dynamics. Particularly important is halting the divergence of the country's south relative to the rest of Italy. However, according to the governor, the current development model is unsustainable due to unfavorable demographic trends. He indicated that increasing employment while maintaining low wages will not ensure long-term competitiveness. The key to success should be investment in human capital and artificial intelligence, whose development is an opportunity that Europe cannot postpone. „Un modello di crescita fondato sull'espansione dell'occupazione e dei salari contenuti non è sostenibile alla luce delle tendenze demografiche.” — Fabio PanettaIn the financial sphere, the governor assessed the condition of Italian banks as solid, which is confirmed, among other things, by the record results of the Unipol group, which in 2025 achieved a profit exceeding 1.5 billion euros. However, he appealed to financial institutions not to show excessive caution in financing innovative projects. Against the backdrop of discussions about market stability, Panetta noted a shift from a phase of widespread optimism to a more cautious risk assessment by investors. In monetary policy, he advocated for maintaining flexibility by the ECB, considering both pro-inflationary risks related to commodities and price-dampening factors stemming from the condition of financial markets. 0,7% — Italy's GDP growth last year Geopolitical events, such as the fourth anniversary of the war in Ukraine or tensions between the USA and the EU, pose an additional burden on Western unity. This is evidenced, among other things, by the postponement of the Meloni-Macron summit to June 2026, which is to take place after the meeting of G7 leaders in Evian. Panetta emphasizes, however, that it is precisely in the era of "permacrisis" that Europe must be able to move beyond ad hoc reactions and focus on joint actions in the areas of energy and capital markets to maintain its weight in the global economy.