Italy is expected to see its GDP fall more than any other country in the European Union after one of the bloc's longest and strictest coronavirus lockdowns, the commission said on Tuesday, amid a warning that one in three Italian businesses risk going under.
The commission's latest forecast predicts an 11.2 percent drop in Italy's real GDP in 2020, around 2 percentage points more than previously predicted, due to a three-month nationwide shutdown as well as ongoing travel restrictions that continue to affect its crucial tourism sector.
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The other worst affected countries are Spain (-10.9 percent) and Croatia (-10.8 percent), while Denmark (-5.2 percent) and Sweden (-5.3 percent) are the most resilient. Across the EU, GDP is forecast to fall by 8.3 percent.
Meanwhile Italy's national statistics institute Istat warned that more than a third of Italian businesses were in danger of closing down due to the crisis, placing some 3.6 million jobs at risk. Small firms and those in the hospitality sector are especially in trouble, the institute said.
But there are signs that Italy will rebound in the coming months, according to the European Commission, with emergency measures by the government expected to help economic activity bounce back from the third quarter of this year.
The European Commission's economic forecast map, showing which countries will be worst hit by the coronavirus crisis.
Industry and manufacturing will be the first sector to recover, while tourism and other consumer services are likely to be slower. Exports and tourism will continue to struggle throughout the year as other countries' economies also contract, the commission says.
Italy's tourism industry says it is facing its worst crisis in recent history, with more than €3 billion of revenue expected to be wiped out this year alone.
Around 60 percent of Italy's hotels and restaurants are in danger of going out of business within a year, Istat warns, risking some 800,000 jobs.
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Even so, in 2021 Italy's GDP is expected to grow by 6.1 percent, the commission predicts – provided that a second wave of coronavirus infections doesn't hit.
“This forecast shows the devastating economic effects of that pandemic. The policy response across Europe has helped to cushion the blow for our citizens, yet this remains a story of increasing divergence, inequality and insecurity,” said Paolo Gentiloni, the former Italian prime minister who is now European Commissioner for the Economy.
He called for member states to adopt a joint recovery plan as soon as possible.