“It is plausible that in the second part of the year a significant recovery could be started, driven by investments and, more gradually, by consumption. However, the prospects are strongly conditioned by the success of the vaccination campaigns and by the launch of the National Recovery and Resilience Plan". This was stated by the head of the Department of Economics and Statistics of the Bank of Italy, Eugenio Gaiotti, during a hearing before the Budget commissions of the Senate and Chamber.
"Ensuring the reduction of infections is an indispensable condition to support the economy – he added – In Italy all the indicators that we observe (including energy consumption, transport flows, retail payments) are in moderate recovery compared to the end of 2020. Overall they suggest that the Economic activity may have remained more or less stable in the first three months of the current year, after the sharp fall of the previous quarter, but with uneven trends across sectors. We estimate that industrial production may have grown by just under one percent in the first quarter; on the other hand, services would have remained weak. These trends indicate the resilience of the economy, but at the same time the persistent brake placed by the new infections. Our investigations show a highly heterogeneous impact of the pandemic on both household incomes and businesses".
On this second front, "we believe there is still the risk that, without liquidity support, even some healthy businesses cannot cope, i.e. companies that after the pandemic would be perfectly able to stay on the market - explained Gaiotti - And for this reason we said that the withdrawal of the measures must be done with great caution and we have also said several times that the measures that contribute to the strengthening corporate assets are essential. There are business risks".
Coming to the Def, according to Bankitalia the scenario presented by the document, which envisages growth of 4,1% in the current year and 4,3% in 2022, "is overall realistic, albeit with significant downside risks associated with the international and with the progress of the pandemic. In the programmatic framework, the new package of support measures, the details of which will be disclosed only in the next few days, and the strengthening of the Pnrr, also with national resources, provide a further boost to growth".
During the hearing, Gaiotti noted that "sustaining over time the effects on growth of the measures envisaged under the Pnrr, which will be announced in the coming days, requires that attention be paid to their effectiveness in increasing not only aggregate demand, but also the country's production capacity, and that reforms aimed at making the environment in which economic activity have concrete implementation”.
