Gross domestic product collapse due to coronavirus. According to the latest growth estimates presented by the EU Commissioner for the Economy, Paolo Gentiloni, GDP in 2020 in Italy will record a double-digit drop: -11,2% (from -9,5% in May), the worst decline in the entire European Union. It will be better next year, when the GDP should recover by 6,1%. The forecast is in line with that issued by the OECD last June 10th.
The Covid-19 pandemic and the resulting closures have caused a "deep contraction" of the economy and the production freeze will impact economic activity “even heavier in the second quarter” than in the first, explains the Commission in its report.
As for the third quarter, however, if our country manages to avoid a second wave, economic activity will resume "helped by the policies" of the Government. Industrial production will recover "more quickly", while tourism and all associated activities will need more time to recover.
Consumer spending should pick up from mid-year, and support from layoffs or other schemes should reduce the impact of the crisis on wages, the Commission continues. But corporate investment “will remain depressed this year, given the high uncertainty on the demand side and the need for companies to conserve liquidity”, despite guaranteed loans, tax credits and other forms of support. For Italy, concludes Brussels, "growth estimates remain subject to downside risks, and a protracted collapse of the labor market, once the emergency measures are over, could curb the expected recovery".
Expanding the analysis to the whole euro area, in 2020 GDP will fall by -8,7% (from -7,7% in May) to then rise again in 2021 to +6,1%.
In addition to Italy, the heaviest repercussions will be felt in Italy Spain (-10,9%) and in France France (-10,6%). "Limit the damage" instead Germany, where GDP will drop by 6,6% in 2020, to then rise again by 5,3% in 2021. For Brussels, this is “an even deeper recession” than expected, and with “wider divergences”.
“The summer economic forecasts show us that the road to recovery is still paved with uncertainty,” explained Gentilioni, also because "the pandemic has hit the European economy harder than expected, even if a cautious rebound is beginning". In 2020 "relatively strong contractions are expected in Italy, France and Spain, while smaller contractions are expected in Germany, the Netherlands and Poland", explained Gentiloni, underlining that "the differences between countries, both in the recession and in the recovery, are linked the different timing and rigor of the lockdowns, and the different economic structure”
Downward magazines too inflation forecasts: for Italy the estimate is 0% and +0,8% next year. In May, Brussels estimated -0,3% and +0,7% respectively.
