By COLLEEN BARRY, AP Business Writer
MILAN (AP) – The head of Italy’s central bank said on Monday that the eurozone’s third-largest economy could grow by 4% this year, after losing 9% in the pandemic year of 2020.
In the Governor of the Bank of Italy’s annual report on the economy, Ignazio Visco cited indications of resumption of industrial production and plans for new investments by companies alongside the progress of vaccination plans, which together could help to accelerate the recovery.
He noted that Italian businesses were in better shape to enter the pandemic than the financial crisis of more than a decade ago, and that significant European and government support measures were helping to stimulate the economy.
Italy is expected to be the biggest beneficiary of EU stimulus funds, which, according to Visco, “offers us the opportunity to improve the functioning of the public sector, stimulate private enterprise and modernize the economy. “.
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The first country in the West to be hit by the virus, Italy suffered a huge 12% drop in economic output in the first six months of 2020. The economic impact was lighter during the fall surge , noted Visco, although the health crisis was more serious. , due to both more moderate restrictions and economic support from the government.
Consumption fell nearly 11% in 2020, as even families reporting no drop in income held back and invested more in their savings, Visco noted. With the economic situation still uncertain, personal savings doubled last year, while the drop in spending was four times the overall drop in available earnings.
“With the health situation normalizing and less uncertainty, the high levels of accumulated savings could gradually translate into increased consumption,” he said.
Visco said “significant weaknesses” in Italy’s social protection system were “exposed by the pandemic”. He cited the shortcomings of employment support centers in Italy, saying that one in 10 Italians find work in employment centers, compared to 7 in 10 in Germany.
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