ROME (Reuters) – The virus-hit Italian economy is forecast to grow 4.1% this year and 4.2% in 2022 in an “uncertain ascent from a deep abyss”, the country’s business lobby Confindustria said on Saturday.
Italy’s economy shrank to a post-war record of 8.9% last year, and Confindustria said even forecasts for “historically high” growth would not offset last year’s losses.
“By the end of 2022, the economy can hardly bridge the gap opened in 2020 by the pandemic,” said Confindustria while announcing its latest economic forecasts.
The national business association warned, however, that its forecasts are based on expectations for advancement of vaccinations in Italy and across Europe, and are dependent on the coronavirus being “contained in an efficient manner”.
“Given (this) large uncertainty, the risks associated with GDP (gross domestic product) forecasts are high, both on the upside and the downside,” the report added.
The group said it had cut its initial growth forecast for Italy, published in October, by 0.7 percentage points for this year due to weaker-than-expected growth in the last 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 at 4.8% in 2022. The increase in government spending to support the economy pushed the country’s deficit to 9.5% of GDP at the end of last year.
Italy has recorded more than 113,000 deaths from COVID-19 since the outbreak first emerged in February last year, the world’s seventh highest.
Mario Draghi’s government expects GDP to increase by 4.1% this year and 4.3% in 2022, three sources close to the matter told Reuters in March.
The official Rome estimate, made by the previous government in January, predicts a deficit-to-GDP ratio of 8.8% this year, based on an economic growth forecast of 6%.
New deficit and debt targets, along with multi-year GDP growth forecasts, to be published in the Treasury’s Economic and Financial Document, are expected to be approved next week.
The European Commission, International Monetary Fund and Bank of Italy are currently seeing Italy’s growth below 4% this year and next.
Reporting by Giulia Segreti; Edited by Helen Popper