Italy is currently suffering soaring poverty rates, reaching a 15-year-high, as the most recent data shows that the nation’s economy shrank by 8.9% in 2020 – one of the worst downturns recorded in Europe.
But things are on track to improve this year, as “world trade and global industrial production have remained on a recovery path,” reported ISTAT.
In the fourth quarter of 2020, the Italian Gross Domestic Product decreased by 1.9% with respect to the previous quarter, but the carry-over for 2021 is positive – with a growth of 2.3%.
Household consumption went down in the final quarter of last year, which the statistics body attributes to lower spending on services, clothing and shoes.
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The drop in economic activity was owed to a reduction in working hours, but the forecast is positive based on activity over the last month.
Italian Minister for Economy and Finance, Daniele Franco, told TV news TG2, that “the impact of recovery on the Italian GDP will be an increase of 3%.”
Speaking at a hearing on the Recovery Fund, Franco said, “For our country, the plan is a very important opportunity, making it possible to tackle some structural problems in a coordinated manner and with significant resources”.
The recovery pot is currently set at 196 billion euros and the Minister said there will be “a very rapid and concise phase” in April. However, what that will look like remains unclear, as Franco stated they “haven’t yet identified a strategy” for it.
Italy’s figures are bouncing back, in any case. In February, inflation was on the rise. The upturn in business and household confidence, combined with the recovery in international trade, could be factors that are contributing to positive economic developments, stated ISTAT.
The report further added that the economic sentiment indicator for both the euro area and Italy is rising sharply.
To turn the nation’s fortunes around, Franco said that the Next Generation of EU citizens can “contribute to increasing our development potential”. To do so, Franco claims the Italian plan must prioritise digitalisation and social inclusion.
There are high hopes that Italy’s recently-appointed prime minister Mario Draghi, former head of the European Central bank, will be able to turn the country’s beleaguered economy around.
In a recent speech, Draghi said the coronavirus crisis presented “the opportunity or rather the responsibility to start a new reconstruction” of Italy’s economy.
Italy expects to receive more than 200 billion euros from the EU’s post-coronavirus recovery fund, and Draghi insists the money will be used for major reforms.
“These resources will have to be spent with an aim to improve the growth potential of our economy,” Draghi said.
He promised reform to Italy’s stifling bureaucracy, labyrinthine tax code and snail-paced justice system, as well as a focus on education and closing the gap on female employment.