A GDP decline of more than 10% and recovery not before 2025. These are the predictions for the Italian economy according to Prometeia, the Italian consultancy company also forecasting significant repercussions for the global economic situation.
The effects of COVID-19 will be felt throughout the world economy. The global GDP, according to Prometeia's latest forecast report, will be down by 5.2%, with global trade decreasing by 14.4%. At European level there is talk of a drop of 8.1% on average in the GDP.
The situation is Italy will however be worse, where the gross domestic product will fall by 10.1% in 2020, albeit with a rebound of 5.9% in 2021, which will leave much room for a recovery that will not take shape for at least five years. The fiscal stimulus, which is worth five points of GDP, translates into greater liquidity for households but is still insufficient to trigger a real recovery in spending.
According to the Bologna research centre, Italy will certainly have to resort to the European Stability Mechanism (ESM), benefiting from one of the largest shares of the 650 billion euros potentially allocated, 18.8%. In 2020 the deficit/GDP ratio could be 11% and the debt/GDP ratio 159%.
"In summary," reads Prometeia's most recent forecast, "the overcoming phase will see our country with a level of economic activity lower than the pre-crisis one, with less employment, with a higher level of household savings and higher debt in non-financial companies and the public sector. More generally, there will also be an increase in disparities at many levels, in the functional and personal distribution of income, between genders and age groups, between productive sectors and territories: small businesses, the self-employed and less educated workers will suffer the most".
The report also adds that "in this context, massive interventions by the ECB have been essential in the acute phase of the crisis but cannot solve structural problems. In this direction, an opportunity not to be wasted comes from the unprecedented possibility of access to potentially large public funds and very favourable conditions. If properly directed towards the well known areas of fragility of the Italian economy (from healthcare and schools to infrastructures), these resources could force Italy to make that leap in productivity, and therefore growth, which has been missing for 25 years".
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