We are back in the 90s. This is the effect that Covid-19 has had on the Italian economy, setting it back thirty years. The lowest point was reached between April and May, when the whole country had to stop due to the lockdown. The good news though is that the rebound that has been materializing in recent weeks is taking over a "V" shape, ie: the collapse is followed by a surge.
In numbers, according to the forecasts contained in the latest Prometeia report, this trend translates into a -9,6% of GDP in 2020 and then +6,2 in 2021 and in 2022 (+2,8%). The return to pre-crisis levels will only take place in 2023.
COVID-19: THE IMPACT SECTOR BY SECTOR
There are sectors that managed to contain losses in 2020. Others, on the other hand, have experienced a real meltdown. Prometeia includes three sectors in the category of those "most exposed to contagion". These are services such as accommodation, catering and entertainment which at the end of the year will lose between 30 and 35% of the added value.
On the contrary, telecommunications, utilities and financial intermediation will better resist the impact of the crisis.
Even within industry, forecasts vary from sector to sector. Maglia nera goes to the automotive industry, which will close 2020 with a 35% drop in added value. A better performance is instead estimated for the sectors that produce essential goods, such as pharmaceuticals and food. “In 2021 – Prometeia estimates – the added value of all macro-sectors will return positive. Industry and construction will drive the recovery of GDP, which however will still remain far from the pre-Covid value of 1,7%”.
ITALY: EU FUNDS ESSENTIAL FOR RECOVERY
The forecasts listed so far can only come true on condition that Italy makes proper use of the funds made available by the European Union through the Recovery Fund. In total, 2021 billion euros of resources will arrive between 2027 and 207.
According to Prometeia, due to the historical difficulties that characterize the country, Italy "will be able to use only 70% (145 billion) of the funds made available, thus contributing to an additional growth in GDP of 1,7 percentage points at the end of the forecast horizon in 2023”.
Not only that, the association also warns of the probable temporal mismatch between spending commitments and availability of Next Generation EU funds at the beginning of next year. Precisely to fill this time gap "it is also advisable to access the Mes, which would allow savings in interest expenses", reads the report.
THE EFFECT OF COVID-19 ON WORLD ECONOMIES
Due to the Covid-19 pandemic that has hit the world, in 2020 world GDP will contract by 5,9%. “In Europe and the United States, the confidence of households and businesses has improved, but the recent increase in infections curbs optimism”, underlines Prometeia.
Things are better in China, where activity has already returned to pre-crisis levels and 2020 GDP will close at +1,6%, while the greatest difficulties are recorded in emerging countries, grappling with a deeper than expected recession. An example above all is India which will experience one of the worst recessions (-13,5%).
In the USA, GDP in 2020 will fall by 4,2%, less than the global average thanks above all to the fiscal and monetary stimuli which have supported demand. In the Eurozone, on the other hand, a drop in the gross domestic product of -8% is expected. “The Next Generation EU will have an effect on GDP by 2023 of +0,8 percentage points, less than half the impact on Italy. The economies of all major countries have entered a recovery phase since May, which could however be compromised by a resurgence in the spread of the virus”, concludes the report.
