The estimates on Italy’s economic growth undergo new changes: in the quarterly bulletin, the Bank of Italy has assumed a GDP of 3.2% for 2022 compared to 2.6% in Junetaking into account a hypothetical scenario in which the war in Ukraine could continue for the whole year and the stop to Russian gas would be only partial. For the two-year period 2023-2024, on the other hand, economists revise downwards the forecasts elaborated only last month: from 1.6% down to 1.3% for the next year and from 1.8% to 1.7% for the next one.
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The scenery
However, the Bank of Italy also evaluates the worst context in which the cut in gas imported from Moscow was total and, in that case, the effect would be negative on GDP, and therefore on the growth of the country: in 2022 it would expand to less than 1%, while a recession could occur next year by almost 2 percentage points and with a recovery from 2024. The scenario assumed, however, does not include possible economic policy responses that could be introduced to mitigate the effects on households and businesses. It is estimated that aid measures for businesses and households to tackle the rise in energy pricestogether with those introduced in recent years to counter the pandemic emergency and the interventions planned in the Pnrr – writes the Bank of Italy -, can raise the overall level of GDP by over 3.5 percentage points over the three-year period 2022- 24, of which about 2 points attributable to the measures outlined in the plan.
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Employment and consumption
The economists’ estimates show that employment would tend to expand, albeit at a slower rate than GDP. The unemployment rate could drop from 9.5% in 2021 to 8% in 2024. After that the decline in the first quarter, household consumption would develop, albeit slow, in the rest of the current year and in the first half of 2023. Taking an annual average, in 2022, consumption is expected to increase by 2.3%, by 0.5% in 2023 and by 1.6% in 2024. On the other hand, the propensity to save would decline: as already happened in 2021 when it was 13.1% (compared to 15.6% in 2020), in 2024 it could reach the values before the pandemic.
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Risk assessment
The forecasts of the Bank of Italy are positive, because the risks are oriented downwards, the economists explain: the main one is undoubtedly the trend of the conflict between Russia and Ukraine, a which could affect the availability and prices of raw materials – they write -, as well as lead to a stronger slowdown in world trade and a more marked deterioration in confidence. This is followed by the risk that the Covid-19 pandemic will suffer another surge: if spread globally, it could also cause impacts on international supply chains. Other risks are consequences of these first two, such as the rise in inflation, energy prices, wages.
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