We finally see the light at the end of the tunnel. More than a year has passed since the outbreak of the Covid-19 pandemic and finally, thanks to the reopening and vaccination campaigns underway in all Member States, the European Commission foresees a "strong rebound in economic activity” and looks optimistically at the latest inflation data. Positive forecasts also for Italy, whose gross domestic product is expected to grow by 2021% in 4,2.
GDP AND INFLATION FORECASTS
Il GDP of the European Union will grow by 4,2% in 2021 and by 4,4% in 2022. Similar forecasts also for theEurozone where growth will be 4,4% this year and 4,4% next. These are the forecasts put on paper by the European Commission which speaks of a "significant improvement in the growth scenario compared to the February forecasts". “The EU and all the states – continues Brussels – should see their economies return to normal levels pre-crisis by the end of 2022”. At the basis of these improvements there are the vaccines, so much so that "the growth of the economy resumes the more the vaccination rate increases and the more the containment measures are relaxed", explains the commission.
Going into details, the vice president Valdis Dombrovskis he specified that “the Recovery Fund will help the recovery and deliver a real turning point in 2022, when it will cause an increase in public investment to the highest level in over a decade. Many risks will continue to loom as long as the viral pandemic lasts. Until we're on solid ground, we'll continue to do whatever it takes to keep people safe and businesses afloat."
Paolo Gentiloni, EU economic affairs commissioner added: “Unprecedented budget support has been – and remains – essential to help workers and businesses weather the storm. The corresponding increase in deficits and debt is set to peak this year before starting to decline. We have a lot of work ahead of us – in Brussels and in national capitals – to make the most of the historic opportunity of the NextGeneration EU”.
Brussels is also optimistic about theinflation which should reach 1,7% in 2021 and 1,3% in 2022 in the Euro area and 1,9% in 2021 and 1,5% in the EU. However, there are risks: “Estimates may underestimate household propensity to spend or underestimate consumers' desire to maintain high levels of precautionary savings. Another factor is the timing of the withdrawal of fiscal support, which if premature could jeopardize the recovery. On the other hand, a delayed withdrawal could lead to market distortions, artificially keeping unprofitable companies alive”.
ESTIMATIONS ON ITALY
After the collapse of GDP recorded in 2020, the long-awaited rebound is coming for us too. In 2021 Italian GDP will grow by 4,2%, while in 2022 the increase will be 4,4%. “Vaccinations and the easing of restrictions are paving the way for the strong recovery of the Italian economy in the second half of 2021. Investments supported by the EU should put the economy on a path of sustained expansion, which should allow growth of return to the pre-pandemic level by the end of 2022” writes the EU Commission in its spring economic forecasts.
This year the debt Italian continues to rise reaching 159,8% "due to the continuation of public support" to the economy, but the downward spiral should begin next year, when the public debt will drop to 156,6%. Same trend for the deficit which will rise to 11,7% this year and then fall to 5,8% next year thanks to the drop in public spending and the acceleration of revenues”. On the employment front, the unemployment rate in Italy it will rise to 10,2% this year and then return to 9,9% in 2022.
“The economy will grow robustly this year and next. The prospects are better than expected due to two factors: a stronger-than-expected rebound in global activity and trade, and the impetus of the Recovery that has been incorporated into the forecasts,” said Economy Commissioner Paolo Gentiloni.
