Time.news – Italy is “on the rise” but the recovery path, which will be concentrated in the second half of the year, is still “uncertain” and only at the end of 2022 should it fill the chasm opened in 2020 by the pandemic, one year after the Germania. It is the photograph of the Italian economy taken by the Confindustria Study Center which it considers “crucial” for the resumption, the progress of the vaccination campaign and the correct use of Recovery funds that will have to “soon translate” the National Recovery and Resilience Plan into actions and investments.
Italy bridges the gap a year after Germany
“At the end of 2022, the long recovery of the Italian economy will lead to the complete closing of the gap generated by the pandemic crisis. In the fourth quarter of 2022 the level of GDP will be 0.3% lower than at the end of 2019 but other large European countries will recover sooner: Germany already at the end of 2021 “, underlines the president of Confindustria, Carlo Bonomi.
The recovery strengthens in the summer and winter months
In the scenario outlined by Confindustria in the spring report, Italian GDP should register “a gradual recovery, concentrated in the second half of this year “to reach growth of 4.1% in 2021 and 4.2% in 2022.
Compared to the October scenario, for 2021 the CSC revises its estimate by 0.7 points downwards: this revision is explained by two quarters (the last of 2020 and the first of this year) that are more negative than expected, to due to the worsening of the health crisis since last fall.
The dynamics of GDP in the first quarter of the year are therefore seen as “marginal retreat” due to the negative contribution of services and despite the expected increase in value added in industry. The introduction of new contagion containment measures also risks “jeopardizing” the trend in GDP in the second quarter, which is expected to be “weak” but “not falling”.
The recovery should then “strengthen in the summer months of 2021 and consolidate in the winter ones”. The Csc estimates an acceleration of the rise in the summer months (+ 2.8%) and a further increase in the autumn months (+ 1.4%).
Vaccination campaign and recovery crucial for the recovery
But that prediction “is conditional on the advancement of mass vaccination in Italy and Europe: the hypothesis is that Covid will be effectively contained in the coming months. “The scenario also includes” the positive effects “deriving from the European resources that Italy would have on the basis of the Next Generation Eu program, 14.4 billion for the 2021 and 20 for 2022, in addition to the resources of the 2021 Budget Law.
For Confindustria, “using these funds well is crucial, to really be able to quickly put our heads out of the abyss we have fallen into”. Why without the Recovery funds, the rise in GDP would stop at + 3.4% in 2021 and + 3.6% in 2022 and “we would remain well below the pre-crisis values” with around 120,000 fewer employees in the two-year period.
The CSC estimates 389,000 fewer employees in 2021
And on the employment front, even if there will be an increase in the hours worked per capita, Confindustria estimates a decrease of 389 thousand employed in the current year (-1.7%, after the limited decline of -2.8% in 2020). In 2022 there will instead be room for a recovery in the number of employees (+ 1.4%, equal to + 313 thousand units).
For the “shortsighted” industrialists, a freeze on layoffs
On the blocking of layoffs, the industrialists then return to admonish: “Always protracting and postponing the moment in which we must face the problem of problems is a short-sighted strategy that will bring us more harm than good when we are called to face the problem”, says Maurizio Stirpe, Confindustria Vice President for Labor and Industrial Relations.
Weak consumption but in partial recovery
Consumption of Italian households is expected to recover only partially with growth of 3.6% in 2021 and 4.6% in 2022, after the -10.7% of last year. According to the Csc, “the excess of ‘forced’ savings thus accumulated by households in 2020 amounts to 26 billion euros, a gift that “will be able to fuel the rebound in consumption from the second half of 2021, when it is assumed that the pandemic will be resolved”.
However, according to Confindustria, “the current economic crisis, characterized by the close link with the health crisis, risks generating more lasting effects on consumers than past crises,” altering spending habits even in the medium term, in the direction of greater prudence and a still high savings rate (although below the peaks of 2020): not all the accumulated savings will be spent “.
Public debt at 155.7% in 2021, then it falls
In terms of public accounts, the public debt in relation to GDP, after the 21-point jump in 2020, it is estimated at 155.7% this year and then dropped to 152.9% in 2022, for the improvement of the deficit and the rise in GDP.
The public deficit is expected to gradually decline to 7.8% of GDP in 2021 and to 4.8% in 2022, from the peak of 9.5% recorded in 2020. “Crucial, in this situation of high debts – underlines the CSC – is to preserve the confidence regained by Italy in the financial markets. The interest rate on ten-year BTPs fell to historic lows (0.6% in March): a very favorable element of the scenario “.
Investments held back by corporate debt
Investments, after the large loss in 2020 (-9.1%), “are expected to increase at a fast pace”: in 2021 they should record growth of 9.2%, “although much of the recovery has already been acquired in the second half of 2020”. In 2022 they should increase “beyond the pre-Covid values (+ 9.7%), thanks to the better international context”.
However, according to Confindustria, private investments “will be held back by corporate ’emergency’ debt”: according to a simulation by the CSC, an extension of the repayment of debts would have a positive impact on GDP of + 0.3% in 2021 and + 0.2% in 2022. The recovery of investments will, on the other hand, be “supported by public ones, with increases of 19% per year in 2021-2022, up to 3.6% of GDP “.
Tourism is the most affected sector
Particular attention is paid in the relationship to tourism. “The sectors most affected by the crisis are those most connected with tourist presences”, highlights Confindustria, recalling that the sector is worth 13% of GDP and 14% of employment and that “In 2020 world tourist arrivals fell by three quarters, generating losses equal to 2% of global GDP and putting 100 million jobs at risk”.
“Tourism has come out of a very negative year and requires the utmost attention on the economic policy front to ensure its stability and revival”, warns Bonomi. For Confindustria, therefore, “a long-term strategy requires closer cooperation between public and private actors operating in the sector”.
Gentiloni: “Scenario consistent with EU forecasts”
The scenario of the Centro Studi Confindustria is “largely convergent with the forecasts of the European Commission – explains the European Commissioner for Economic Affairs, Paolo Gentiloni, speaking at the presentation of the report – we will update them in early May with the spring forecasts which will also take into account the foreseeable impact of the Recovery and Resilience Plans and I believe that, to a large extent, some of the elements that emerge from the Confindustria report are consistent with the framework that will be outlined at European level “.
Gentiloni reiterates that “the European Union has given a strong and timely response to this crisis, a strong and immediate reaction which has cushioned the initial dramatic impact of the crisis“and stresses the need.
The EU commissioner also reassures about the easing of budgetary constraints. “We cannot go back to normal fiscal rules too soon. Economic policies must remain supportive in 2021 and 2022: it is very likely that the stop to the Pact will continue in 2022 “. And if, on the one hand, it underlines the need for “a gradual withdrawal” of the support measures, on the other it also recalls the need to make “the support ever more selective”. As for Italy, he assured that the government is collaborating with the EU Commission and that “it is working hard to speed up the presentation” of the Recovery plan.