Due to the war between Russia and Ukraine, it is difficult to predict the trend of the Italian GDP in 2022: the only certainty is that the bar is likely to drop gradually, endangering any possibility of recovery. They agree with this assessment Bank of Italy andParliamentary Budget Office, whose representatives were heard on Wednesday before the House and Senate Budget Committees for hearings on Economic and financial document (Def).
Bank of Italy: "Extreme uncertainty and downside risks"
"The macroeconomic outlook is characterized by extreme uncertainty and the Def growth forecasts, although lower than last autumn, are subject to significant downside risks - he said Fabrizio Balassone, head of the Economic Structure Service of Bank of Italy – The forecasts for the public finances have improved thanks to the results of 2021, which were more favorable than expected”.
However, “overall, on the basis of the information available so far – added Balassone – we estimate that in the first three months of the year the GDP may have decreased by just over half a percentage point. The war has decidedly worsened a picture that had already been deteriorating in the first months of 2022: we now assess that industrial production decreased in the first quarter, reflecting the effects of higher costs and supply difficulties, and that household spending weakened”.
Bank of Italy: aid to households and businesses affected by inflation and sanctions
Balassone then underlined that "the measures to support the economy will have to be directed towards the neediest families and businesses most affected by price increases and restrictions on trade".
Finally, Balassone specified that, "excluding extraordinary interventions dictated by emergency conditions, the situation of the public finances requires that any other new measure find adequate coverage".
Upb: strategy of pragmatic prudence on public finances
The Parliamentary Budget Office also follows the same line: "The programmatic public finance scenario presented in the Def outlines a strategy of pragmatic prudence in a context of high macroeconomic and international uncertainty", said the president, Lilia Cavallari.
As regards the deficit and debt reduction path, "this path of consolidation, if confirmed - he added - appears to be consistent with the principles set out at the European level which aim to reconcile financial sustainability and economic growth".
Upb: if the war lasts for the entire second quarter, -1,5% GDP in the two-year period
If the conflict in Ukraine "lasted throughout the second quarter and the normalization process engaged the second half of the current year, the stagflationary economic effects would be more evident" and the economy would suffer "an additional contraction of about one and a half points percentage overall for the two-year period", concluded the number one of the Upb, underlining that "inflation would rise by about 2,5 cumulative percentage pointsti in 2022-23 in the case of Italy”.
