In these weeks the forecasts on the trend of the GDP (Italian and not only) have multiplied. But what is their value? And above all, how should they be read? Certainly, not as point estimates. In the last bulletin of the ECB, for example, we read that in 2020 the gross domestic product of the Eurozone will undergo a contraction of between 5 and 12 percent: a truly wide range, which gives the measure of the uncertainty in which we navigate.
In a document dated May 15, the Bank of Italy explains that – at the moment – making macroeconomic forecasts is “extremely difficult”, because “the timing and intensity of the recovery will depend on various factors, the evolution of which is difficult to predict”. The list includes very different variables:
- the duration and extent of the contagion;
- the evolution of the climate confidence and the repercussions on citizens' spending decisions and business investment decisions;
- any financial repercussions;
- the effectiveness of economic policies introduced.
Therefore, continues Bankitalia, “the simulations represent above all scenario analysis, based on the impact assessment of epidemiological and economic hypotheses alternatives, which they inevitably are largely arbitrary".
Hence the rather vague forecasts of the ECB, but also the "exceptionally wide range" of the assessments formulated by observers for growth in Italy in 2020 and 2021: "Between -6 and -15 percentage points for the fall this year and between 2 and 13 points for the recovery in the next”, add the economists of Via Nazionale, underlining that “an equally high uncertainty applies to the other countries of the euro area”.
In this scenario, the political variable is the one that offers analysts more grip. Indeed, the Bank of Italy specifies that demand support measures launched so far by the Conte government should provide "a significant contribution to containing the contraction of GDP in the current year, which could be assessed according to traditional multipliers in the order of 2 percentage points".
In particular, Bankitalia considers the credit moratorium and guarantees on new loans essential to avoid the danger of "a liquidity crisis, by keeping companies' credit lines open and meeting the need for funds induced by the crisis".
[Read the Italian GDP forecast provided by Confindustria, European Commission, government (Def) e IMF]
