Italy’s economy may contract 8.3% in 2020

Italy’s economy is expected to contract by 8.3 percent in 2020, the country’s statistics agency Istat said Monday, saying that it expected further revisions as the economic impact from the virus becomes clearer.

The country’s economy was already in stagnation territory at the end of 2019, “with few recovery signals coming from industrial production and external trade at the very beginning of 2020,” Istat said, and that was before the coronavirus struck in February.

A strict lockdown implemented by the government has had “a deep impact on the economy influencing production, investment and consumption decisions and very negatively affecting the labour market” as well as international trade, hitting Italian exports, Istat said.

The stats bureau said its predictions rest on “the hypotheses that there will not be a second wave of contagion, the economic policy provisions will prove to be effective and the monetary policy will remain accomodative avoiding turbulence in the financial markets and (a) credit crunch.”