Italy to cut 2021 GDP forecast to 4.1%, raise 2022 to 4.3%

ROME: Mario Draghi’s government expects Italy’s virus-hit economy to grow by 4.1 per cent this year and 4.3 per cent in 2022, three sources close to the matter said ahead of official publication of the new forecasts next month. The 2021 forecast is a steep downward revision from the 6 per cent growth that had been pencilled in by the previous government of Giuseppe Conte, which collapsed in January, while the 2022 projection is above Conte’s target of 3.8 per cent. Both forecasts remain above those of the European Commission, the International Monetary Fund and the Bank of Italy, which all currently see Italian growth below 4 per cent this year and next. Italy’s economy, which shrank by a post-war record of 8.9 per cent in 2020, is still struggling under the weight of the coronavirus pandemic. Much of the country remains in lockdown to try to tame a third wave, with around 20,000 new infections a day. Italy has reported around 108,000 COVID-19 deaths, the seventh highest tally in the world. The new growth forecasts, along with updated public finance targets, will be contained in the Treasury’s Economic and Financial Document (DEF) to be published by mid-April. This forms the preliminary framework for the 2022 budget and must be sent to the European Commission for approval. The forecasts are subject to ongoing government discussions and could still change marginally before their publication Moreover, they are based on an unchanged policy scenario and so do not include the impact of a new stimulus package which the government intends to present next month. The growth targets will therefore be more ambitious also helped by plans to strengthen Italy’s Recovery Plan in order to obtain more than 200 billion euros of EU funds. — Reuters