The Italian economy is facing the worsening international environment from a position of increased strength in public finances. Prudence in fiscal policy in recent years has increased the country's ability to absorb external shocks, strengthening its sovereign credit rating and lowering market risk perceptions. However, the setting is precarious due to the worldwide geopolitical situation; state debt remains high, and fiscal margins to address external shocks and new objectives are limited. According to recent simulations conducted by the Parliamentary Budget Office, the war in the Middle East will result in a 0.3 percentage point decrease in GDP growth in 2026 and 0.4 point increase in 2027, as well as a 1.4 percentage point increase in inflation this year and 1.1 point increase next year, in comparison to pre-war forecasts from February of last year. The energy shock also shows the Italian economy's structural vulnerability and emphasizes the importance of accelerating the energy transition, which has the potential to be a driver of competition and innovation.