Eurozone, Lagarde: recovery of pre-Covid levels by 2021
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September 16, 2021
The Italian recovery has also 'surprised' the Fitch agency which in the new Global Economic Outlook announces that it has "revised upwards our 2021 GDP growth forecasts for Italy to 5.7%, from 4.8% in June ". A revision that - it is emphasized - "is largely the result of a very strong growth result in the second quarter with an increase of 2.7%, above our expectations of + 1.4%". Key element, explains Fitch, is the "faster-than-expected recovery in consumer activity" after the lifting of most of the restrictions. The agency believes "that much of this momentum will persist in the next quarter" also due to the trend of the pandemic: "although the cases of the Delta variant have been increasing since July,they stabilized in August and the number of vaccinations also improved. Therefore, we do not expect a return to significant restrictions. "
Fitch notes that the Italian economy "has recovered faster than expected and the leading indicators for the third quarter continue to look solid" even though "the delays in supply in manufacturing are increasing with consequent short-term inflationary pressures". The agency estimates inflation will hit 2.3% in 2021, up from 1.7% previously estimated.
Overall, Fitch expects the Italian economy to return to its pre-pandemic level in the second quarter of 2022. The recovery of the labor market is also good, with an unemployment rate falling to 9.8% in the second quarter. "The rapid increase in activity is likely to support lower unemployment levels," writes Fitch, which estimates an average unemployment of 10.0% this year for 2021, instead of the 10.9% previously forecast.