Rome, Italy: Italy confronts a “daunting” task in attempting to repair its long-struggling economy with the support of EU post-pandemic recovery money, according to central bank governor Ignazio Visco.
Over the years 2021-2026, the eurozone’s third-largest economy is set to receive a massive influx of loans and grants totaling 191.5 billion euros ($233.5 billion), and its administration has promised a slew of reforms to put them to good use.
The EU-funded national recovery plan “must be part of a joint effort aimed at addressing Italy’s structural vulnerabilities and the unique reasons that have contributed to the country’s lackluster economic growth over the last two decades,” according to Visco.
“The opportunities Italy will be able to offer future generations depend on the success of the reforms and measures of the National Recovery and Resilience Plan,” the governor stressed.
“It is a formidable challenge.”
In his yearly statement on the condition of the economy, Visco also warned that Italy could not afford to keep the economic stimulus measures in place to mitigate the effects of the present downturn.
“A future built on public subsidies and incentives is unthinkable,” he said, noting that public debt, standing at around 160 percent of gross domestic product (GDP), has reached the highest level since the end of World War I.
However, “the support measures for households and firms must be withdrawn gradually and only when the economic situation has been sufficiently consolidated and uncertainty significantly reduced,” the governor said.
Italy has historically been an economic laggard in the EU.
As the first country in Europe to be devastated by the coronavirus pandemic, the country’s gross domestic product fell by about 9% last year, the biggest dip in its postwar history.
Visco predicted a rapid rebound, with GDP increasing by more than 4% in 2021, as the government continues to make headway with vaccinations and economic reopenings.
Although Prime Minister Mario Draghi noted earlier this month that government predictions of annual GDP growth of 4.5 percent this year and 4.8 percent in 2022 could be revised upwards, his views are roughly in line with those of the government.
Things have to start to look brighter in Italy, just in time for the summer season, after months of lockdown gloom, vaccination delays, and a stubbornly high number of viral fatalities.
The country registered 44 Covid-19 deaths on Sunday, the lowest daily tally in more than seven months, while the administration claimed that 20% of the population had been completely vaccinated.
Meanwhile, coronavirus curfews were lifted in three regions with low infection rates, including tourist-friendly Sardinia, on Monday, a move that might be expanded across the country in the coming weeks.