Confindustria’s center of research estimated on Tuesday “an enormous” decrease of gross domestic product in the first half of 2020, impacted by a cumulative fall in the first two quarters of around 10 percent and it warned of a slow recovery. If the acute phase of the health emergency is overcome at the end of May, Confindustria estimates a 6 percent drop in gross domestic product in 2020.
As reported, Italy has been in lockdown since March 9 and nonessential activities are shut down until April 3, although this regulation may be extended until after Easter, to April 15. The government is expected to issue a decree by the end of the week on the issue. Confindustria’s study stated that each additional week of halted production could cost an additional 0.75 percent of GDP. The essential sectors generate around 60 percent of national production, employing around 70 percent of workers, or 17.3 million people.
At the end of 2020, Italy’s consumer spending is expected to drop 6.8 percent, exports to decrease 5.1 percent and employment fall by 2.5 percent. A partial recovery with 3.5 percent growth is expected in 2021.
If the end of the health emergency takes place in May, Confindustria also expects a 5 percent increase in the country’s public deficit in 2020, compared with 1.6 percent in 2019, and debt increasing to 147 percent of GDP compared with 134.8 percent in the previous year.
Confindustria said the COVID-19 pandemic has “struck the heart of the Italian economy” and that all efforts must be made to “take action immediately, with massive interventions in new ways that have never been known before, nationally and at the European level,” without scrimping on resources and protecting the production and social webs, companies and families. This is the only way to avoid “a prolonged economic depression,” it said.
Italy’s government earlier this month allocated 25 billion euros as an aid package to support the country, which has been heavily impacted by the pandemic. A new decree is expected in April, which is also said to guarantee funds of around 25 billion euros.
For Confindustria, the pandemic is putting a pressure on Italy’s production system that has no equal and “whether it resists will allow the country to relaunch,” once the health emergency is over.
In its study, “The forecasts for Italy. What are the conditions for protecting and relaunching the economy?” Confindustria states that the country has “never in history faced a health, social and economic crisis of this size.”
According to media reports, Vincenzo Boccia, president of Confindustria, has sent a letter to the heads of all the members to honor payments. “The resilience of the pipeline and the economic system depends on us, on our ethic responsibilities and our behavior. For this reason I ask all companies to honor their payments, except for serious and proven difficulties, which will guarantee the continuity of our system. This is the time of social responsibility. We can and we want to be the center and promotion of the rebirth.”