The war between Russia and Ukraine has already significantly affected the Italian economy, but the risk is that – in the end – the damage will turn out to be much more serious than those calculated so far. If the military phase of the clash continues throughout the spring, followed by a normalization process extended to the rest of the year, the GDP of our country would suffer an additional loss of about one percentage point in 2022 and nearly half a point next year. The Parliamentary Budget Office writes it in the April economic note.
The analysis also shows that, with another two months of war, this year the Eurozone would suffer a repercussion similar to that of Italy (-1% of GDP), while the consequences worldwide would be more contained, even if " not marginal".
If the war continues, what changes for inflation?
A similar pattern also applies to inflation. If the war were to continue until the end of the second quarter - continues the Upb - in Italy the race for prices would increase significantly, registering an additional acceleration of more than one percentage point both this year and next. The effects on inflation would be less serious in the euro area (about half a percentage point more in both 2022 and 2023), while from the point of view of the global economy, the impact on prices would even be "limited".
The current picture
GDP trend in the first quarter
These possible developments would only aggravate an already negative picture. Again according to estimates by the Parliamentary Budget Office, in the first quarter of this year, Italy's GDP “would have contracted in economic terms by about half a percentage point, with a very broad but balanced range of variation (between -0,9 and 0,1 per cent).
Inflation: in March the highest level since 1991
As for inflation, "in the wake of the tensions in the energy markets and the uncertainty linked to the Russian-Ukrainian conflict - concludes the Upb - the monthly trend in consumer prices in March reached 6,5% yoy (from 5,7. 1991 of February), a value that has not been reached since XNUMX".
Visco: "The war has enormous negative impacts on the world economy"
"The shocking events in Ukraine are having enormous negative impacts on the world economy" and "it will take time to assess the human, moral and economic cost of the war". This was stated by the governor of the Bank of Italy, Ignazio Visco, in his speech to the Development Committee of the World Bank and the International Monetary Fund.
Visco then underlined that the shortage of basic necessities, the extraordinary increases in energy and food prices and the increase in commercial costs - together with supply chain disruptions - are already putting developing countries in crisis of development, especially the poorest.
“We agree that the World Bank, in collaboration with other relevant multilateral institutions, should promptly address food insecurity in Africa, Central Asia and the least developed countries – added the number one of Bank of Italy – This should include actions to increase food supplies and avoid export restrictions, including through support for regional integration and transport infrastructure. Creating jobs and helping the development of the private sector are necessary complementary objectives”.
