Italy statistics bureau hikes 2021 growth forecast as COVID clouds clear

The Unicredit headquater is seen at Porta Nuova's district downtown Milan
FILE PHOTO: The Unicredit headquater (C) is seen at Porta Nuova's district downtown Milan, Italy, January 13, 2016. REUTERS/Stefano Rellandini

June 4, 2021

(Refiles to fix typo in headline)

ROME (Reuters) – ROME, June 4 (Reuters) – The Italian economy, will grow by 4.7%this year, national statistics bureau ISTAT said on Friday, raising a previous projection of 4.0% made in December as the country’s coronavirus crisis eases.

In its twice-yearly economic outlook report, ISTAT forecast that gross domestic product will increase by 4.4% next year.

The institute’s latest projections are fairly close to those of Mario Draghi’s government, which sees growth of 4.5% this year and 4.8% in 2022.

The sustained economic expansion forecast by ISTAT this comes on the back of the 8.9% contraction in 2020, a negative post-war record, when the euro zone’s third largest economy was hobbled by lockdowns to try to contain the coronavirus.

Growth over the next two years will be “due to domestic demand, led by investments and, to a significant but lesser extent, by consumer spending,” ISTAT said in its twice-yearly report.

Trade flows will offer only a marginal contribution to growth this year, it said, and will be a drag on growth in 2022.

Draghi has been easing COVID-19 restrictions since April in response to a steady decline in new infections and daily deaths.

Italy reported 59 coronavirus-related fatalities on Thursday, and 1,968 new infections.

The International Monetary Fund on Thursday forecast Italian growth of 4.3% this year and 4.0% in 2022.

The economy grew by 0.1% in the first quarter from the previous three months due to higher investments and inventories, ISTAT reported on Tuesday, sharply raising a preliminary estimate for a 0.4% contraction.

The unusually strong revisions, which took the country out of recession, significantly increased the possibility of hitting Rome’s 4.5% full year growth target.

ISTAT forecast an average jobless rate of 9.8% this year, down from its December projection of 11.0%. It projected an average rate of 9.6% for 2022.

The unemployment rate stood at 10.7% in April, ISTAT reported on Tuesday, the highest reading since October 2018.

(Reporting by Gavin Jones)

((gavin.jones@reuters.com))

(Reporting By Gavin Jones)