Italy’s virus-hit economy is expected to grow 4.1% this year and 4.2% in 2022. It is in an “uncertain ascent from the abyss,” the country’s business lobby Confindustria said on Saturday.
Italian Economy Recovery
The Italian economy shrank by a post-war record of 8.9% last year. Confindustria said even such “historically high” growth estimates would not make up for last year’s losses.
“At the end of 2022, the economy will have barely bridged the gap opened in 2020 by the pandemic,” Confindustria said as it announced its latest economic forecasts.
The national business association cautioned.
However, its estimates were based on expectations for progress on vaccinations in Italy and the rest of Europe and hinged on the coronavirus being “contained efficiently.”
“Given the great uncertainty (of this), the risks related to the GDP (gross domestic product) estimates are high, both on the upside and the downside,” the report added.
This was published in October by 0.7 percentage points for this year due to weaker-than-expected growth in the final quarter of 2020 and the first three months of 2021.
It said it saw Italy’s deficit at 7.8% of GDP this year and 4.8% in 2022.
Hikes in government spending to support the economy drove the country’s deficit to 9.5% of GDP at the end of last year.
Italy has registered more than 113,000 COVID-19 deaths since the outbreak first emerged in February last year, the seventh-highest in the world.
Mario Draghi’s government expects GDP to expand by 4.1% this year and 4.3% in 2022, three sources close to the matter stated.
Rome’s official estimate, made by the previous government in January, envisages a deficit-to-GDP ratio of 8.8% this year, based on an economic growth forecast of 6%.
The new deficit and debt targets, along with multi-year GDP growth forecasts, will be issued in the Treasury’s Economic and Financial Document, expected to be approved next week.
The European Commission, the International Monetary Fund, and the Bank of Italy all currently see Italian growth below 4% this year and next.
When the year started, Italy’s government was under pressure to improve the economy of the country.
The Italian government’s fate hangs in the balance amid a confrontation between the prime minister, Giuseppe Conte, and his coalition ally and former prime minister, Matteo Renzi, back in January.
Renzi has repeatedly threatened to pull his small Italia Viva party from the ruling majority unless the government changes how to reboot Italy’s fragile economy.
Renzi has also called for Conte to relinquish his control over the secret services and for the government to speed up the distribution of Covid-19 vaccinations.
Conte has so far resisted the pressure, saying that he was ready to confront Renzi in parliament.
However, Conte is reportedly organizing a meeting between party leaders, either on Monday or Tuesday, to discuss a possible government reshuffle.
The crucial day was 7 January, when Conte sought support from ministers for the economic recovery plan, which could lead Italia Viva to abandon the coalition and prompt a government crisis.