The Italian economy may shrink by as much as 13% this year
Italy's economy could contract from 9.2% to 13.1% this year, with only a slight rebound in 2021, the country's central bank said on Friday.
The Bank of Italy scenario assumes that the pandemic will be kept under control and that the restrictive measures will continue to be gradually removed. It is optimistic compared to economists' forecasts. The more pessimistic scenario predicts new coronavirus outbreaks and the ensuing blockades that could harm the economy.
Last month, the central bank estimated that GDP would fall by 9%. Next year, GDP is to increase by 4.8%.
"This year's tendency is the result of a decline in foreign demand and international tourism as well as a decline in domestic demand"
- said the central bank in its report.
The forecast for 2020 is comparable to the median of economists' forecasts for a 10.3% decline in production. The capital economy looks the most pessimistic, and according to the Italian bank, its declines may amount to as much as 18%. Other banks, including Unicredit and Morgan Stanley, say it will be around 15%.
The Italian government has adopted two rescue packages totaling € 75 billion since March to support companies and workers affected by the pandemic. The Bank of Italy assessed that the support measures would contribute to GDP growth by more than 2 percentage points, which would help contain the expected decline.