The EU cuts the Italian GDP growth estimates in 2022: from 4.1% to 2.4%

The economic estimates of the European Commission estimate the recovery, not only in Italy but in the whole Eurozone, to be lower. Due to the war in Ukraine, the inflation rate will reach levels “never so high in the history of monetary union”, warns Commissioner Paolo Gentiloni. In our country there are still high deficits and debt, which however continue to fall steadily

The European Commission cuts Italy’s growth estimates. GDP is expected to drop to 2.4% in 2022 and slow to 1.9% in 2023, compared to 4.1% and 2.3% forecast last February. Most of the Italian growth, reports Brussels, must be attributed to “a drag effect” linked to the “rapid recovery” recorded in 2021, after the crisis triggered by the Covid-19 pandemic. Responsible for the worsening outlook is the war in Ukraine which, weighing on supply chains and causing prices to rise, brings with it “pronounced downside risks.” The return of the Italian economy to pre-crisis production levels should see a more sustained expansion path in 2023, thanks to the investments of the NRP. And it is always the conflict in Eastern Europe that instead leads Brussels to estimate inflation on the rise. If in February the EU Commission predicted that in 2022 Italy would stopped at 3.8%, it is now thought that it will come close to 6%.

Deficit and debt in Italy

The Italian deficit, at 7.2% in 2021, will reach 5.5% in 2022 and 4.3% in 2023. The debt, from 150.8% last year, will increase to 147.9% this year and to 146.8% in 2023 “significantly also following the gradual abandonment of fiscal measures linked to the pandemic”.

Inflation in Italy and the Eurozone

According to estimates, the inflation rate in Italy will be 5.9% in 2022, below the European average of 6.1%. Next year it should drop to 2.3% for Rome and 2.3% in the Eurozone. EU Economy Commissioner Paolo Gentiloni has defined the inflation rate he is facing as “the highest in the history of monetary union.” Economic uncertainty has been “dramatically” increased by the war in Ukraine, just as the EU “He was shaking off the blow of the pandemic.”

The consequences of the Russian gas stop

The Commission is examining the hypothesis of a European embargo on Russian gas. Italy, according to the forecasts, “would be seriously affected”, as a country among the “major importers of Russian natural gas” in the EU. But the whole Eurozone would be affected by the interruption to energy supplies from Moscow: the stop could cost 2.5% of the growth and 3% of the inflation rate for the EU.

The growth of the Eurozone

The growth of the entire Eurozone will slow down to 2.7% in 2022 and to 2.3% in 2023. Therefore, the previous estimates that gave GDP to 4% in 2022 and 2.7% in 2023 are cut. The European countries with the lowest GDP growth forecasts are Germany (1.6%), Finland and Estonia (both at 1%).