- IMF, Italy last in the ranking: GDP -12.8% in 2020 and + 6.3% in 2021
- IMF cuts the GDP estimates, down the stock exchanges
- Visco: uncertainty forecasts, well-constructed plan needed. GDP 2020 around -20%
- Gentiloni: EU relaunch plan necessary, agreement perhaps in July
- Mes, Dombrovskis: "It has no conditions, Italy pays off"
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07 July 2020 The EU economy will suffer a deep recession this year due to the coronavirus pandemic, despite the "rapid and comprehensive political response at both EU and national level". This is what the European Commission says in its economic forecasts published today in Brussels. Due to the fact that the removal of lockdown measures is proceeding at a more gradual pace than assumed in the previous Spring Forecasts, the negative impact on economic activity in 2020 will be more significant than expected, stresses the Commission.The economic forecasts for summer 2020 predict that the economy of the Eurozone will contract by 8.7% in 2020, and then return to grow by 6.1% in 2021. The EU economy should contract by 8.3% in 2020 and grow to around 5.8% in 2021. The forecast of the contraction in 2020 is significantly greater than the 7.7% forecast for the Eurozone and 7.4% for the whole EU in forecasts of spring. Growth in 2021 will also be slightly less robust than was expected by the Commission in the spring.
Italy in deep crisis
The Covid-19 crisis and containment measures 'have pushed Italy into a deep economic contraction'. The European Commission indicates this in the new forecast report. In the first quarter, GDP fell by 5.3% and in the second, 'the damage to economic activity is expected to be stronger'. The economy began to recover from pandemic production 'as soon as the associated containment measures eased in May'. In the absence of a second wave of infections, economic activity will begin to recover in the third quarter of this year, helped by substantial support for political action. '
While industrial production is likely to pick up faster, tourism and many other consumer-related services are expected to recover more gradually, thus easing the rebound in demand. Production losses in the first two quarters are likely to be greater than assumed in the spring, with real GDP forecasting down 11.25% this year. In 2021, the expansion will move from a technical rebound to a more authentic recovery. Furthermore, the quarterly profile compared to 2020 implies a substantial carry-over effect, contributing considerably to the growth of the average annual production of 6% in 2021. However, real GDP is not expected to return to the level of 2019 by the end of 2021 .
the European Commission indicates that in Italy with the revocation of the containment measures, consumer spending is likely to recover in the second half of 2020. household deposits increased considerably and income support through social transfers and employment programs Short term is expected to partially offset the negative impact of the employment and disposable income pandemic. On the contrary, business investment is likely to remain depressed this year, given the high uncertainty of demand and the need for business to support liquidity, 'although loan guarantees, deferred tax payments and credit claims 'tax provide valuable support'.
Capital expenditure is expected to gain ground in 2021, supported by public investment. The economies of Italian trading partners are expected to contract sharply in 2020, which implies a substantial drop in exports, with tourism among the most affected sectors. However, the export sector could drive the recovery once the global economy takes hold. In 2021, exports are expected to grow in line with global trade. Growth prospects in Italy 'remain subject to downside risks'. A prolonged labor market crisis, once emergency measures have expired and consumer sentiment has diminished, could slow the expected recovery.
Gentiloni: "Estimates show devastating Covid economic effects"
"So far the coronavirus has caused the death of over half a million people worldwide, a number that is still increasing, day after day - in some parts of the world at an alarming rate". This was said by the European Commissioner for the Economy, Paolo Gentiloni, commenting on the European Commission's summer economic forecast. "Today's forecasts - explained Gentiloni - demonstrate the devastating economic effects of the pandemic. Throughout Europe, the political response has made it possible to amortize the damage to our citizens, but the situation remains characterized by growing disparities, inequalities and insecurity.
That's why it is so important to reach an agreement quickly on the recovery plan proposed by the Commission - to instill in our economies, in this critical period, both new confidence and new financial resources ". "In relation to the Mes and other instruments" for the post-Coronavirus eurozone economic recovery, the "European Commission is working to make them available without macroeconomic conditionalities" says Gentiloni. "I think we are successful in these efforts. We have the tools, but it is up to the Member States to decide if and when to use them," he added.
'Italy was the country with the longest period of closure of the activity, introduced it first and released the confinement more or less in line with the other States, for this reason the situation is what it is "he explains Gentiloni indicating that also in Spain and France the situation is very serious even if in a slightly lower form than Italy Gentiloni has invited 'not to focus on the differences between country and country, but on the challenge that will have to be faced by the government and Italian '.
Dombrovskis more serious lockdown economic impact than expected
"the economic impact of confinement is more serious than we originally expected. We continue to navigate rough waters and are exposed to many risks, including another massive wave of contagions, "said European Commission vice-president Valdis Dombrovskis, commenting on the European Commission's summer economic forecast." beyond any other consideration - he added -, the forecasts are an eloquent example of the need to conclude an agreement on our ambitious recovery package, NextGenerationEu, to help the economy. As for the next few months of this year and 2021 we can expect a recovery, but we will have to closely monitor the risk of this happening at different rates. It is our duty to continue to protect workers and businesses and to scrupulously coordinate policies at EU level, in order to emerge from the crisis stronger and more united ".
The EU economy will experience a deep recession this year due to the #coronavirus.
This is despite the comprehensive policy response at both EU and national levels.
We need a swift agreement on #NextGenerationEU recovery plan and #EUbudget to help the economy. #ECForecast