Milan (AFP)

An ungovernable country?

Wasted European funds?

Worst recession since World War II?

Former European Central Bank boss Mario Draghi, expected as the Messiah by Italians, will face enormous challenges.

Here are the main economic projects that await the Italian banker if he manages to form a government.

- The economy is in the dark -

The third-largest economy in the euro zone is struggling, hit by the devastating effects of the coronavirus pandemic.

The peninsula suffered one of the worst GDP drops in the euro area in 2020, with a plunge of 8.9%.

The first country affected by the pandemic in Europe, Italy had imposed strict containment in March and April, paralyzing a large part of its economic fabric.

With the easing of measures, the economy restarted in the third quarter (+ 16%), before plunging again in the fourth (-2%) due to the second wave of the pandemic.

"The Covid-19 has worsened the crisis and Italy continues to be the sick man of Europe," said AFP Fabio Pammolli, professor of economics at the Polytechnic business school in Milan.

- Restart the machine -

To revive the machine, Rome is counting on a plan of more than 200 billion euros financed by the European Union.

A heated controversy over the use of these funds blew up the center-left coalition in power.

Matteo Renzi slammed the door, accusing the resigning head of government Giuseppe Conte of distributing largesse to Italians instead of taking advantage of this manna to structurally reform the country.

And he did not hesitate to quote remarks by Mario Draghi, who had estimated in August that a debt is "bad" if it is used "for unproductive ends".

The delay in setting this plan to music has raised concerns in Europe.

With the arrival of Mario Draghi, these fears are allayed.

"If there is one person capable of reassuring Brussels about Italy's determination to implement the recovery plan, it is he", comments Mr. Pammolli.

"Angela Merkel leaves the scene, but Europe finds a charismatic leader".

- Presidency of the G20 -

Taking over from Saudi Arabia, Italy is assuming the presidency of the G20 this year, which brings together the twenty most powerful economies on the planet.

This prestigious event generally serves as a showcase for the organizing country.

In the case of Italy, in the midst of political turmoil, the presidency risked turning into a fiasco.

"Mario Draghi's international status gives the Italian presidency a very specific weight. The country will be able to reposition itself on the geopolitical chessboard after years of instability," said Mr. Pammolli.

- An exploding public debt -

Over the years, Italy has accumulated a colossal debt of nearly 2.6 trillion euros, or 158% of GDP at the end of 2020, the highest ratio in the euro area behind Greece.

Brussels suspended the rules of budgetary discipline in 2020, an unprecedented measure taken because of the pandemic.

But this mercy will not be eternal.

“As a connoisseur of the workings of the ECB, Mario Draghi is best placed to negotiate a potential restructuring of the country's debt,” analyzes John Plassard, investment specialist at Mirabaud.

- Risk of social crisis -

Italy's unemployment rate rose further in December, reaching 9%, well above the euro area average.

Worse, for young people aged 15-24, it reached 29.7%.

According to the Coldiretti agricultural union, the number of Italians seeking food aid increased by more than a third in 2020 to reach 3.7 million people, or one million more, the "new poor" of the Covid -19.

In addition, "at the end of March, the freeze on layoffs comes to an end", which carries the risk of "a serious situation of social tensions", Lucio Lamberti, professor of strategy, told AFP at the Polytechnique business school.

© 2021 AFP