The International Monetary Fund (IMF) said in a report that the Italian economy had recovered vigorously from the fall in production related to Covid-19, avoiding economic scars.
Employment and labor force participation have fully recovered, the IMF says, and banks’ non-performing loans have declined, while their capital positions have strengthened.
However, the Italian economy now faces major new challenges, with the war in Ukraine and disruptions to global supply chains pushing up energy prices and inflation more broadly, as well as intensifying shortages of key products even as the slowdown continues. of global demand, highlights the Fund.
For the IMF, ensuring an adequate supply of energy in Italy is a priority. A severe drought in the northern part of the country will further pressure food prices and bring energy security challenges.
The economy’s growth is expected to decelerate sharply due to the war in Ukraine, tightening of monetary policy, continued supply chain disruptions and higher and more persistent inflation.
The IMF projects GDP expansion of 3% in 2022, mainly due to the strong transition from last year, with a further deceleration to around 0.75% in 2023.
Average annual inflation is expected to peak in 2022 at 6.75% and gradually adjust thereafter.
In the following years, with the moderation of energy prices, growth is expected to recover, reinforced by public investment expenditures under the National Recovery and Resilience Plan (PRNR).
Source: CNN Brasil
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