The International Monetary Fund delivered slightly improved growth forecasts on Thursday for Italys economy in 2021 and 2022 as it gradually recovers from the coronavirus crisis with support from increased fiscal spending.
The IMF now sees Italys gross domestic product up 4.3 and 4 in 2021 and 2022 respectively, revised up from an April estimate of 4.2 and 3.6, and closer to the governments projections of growth of 4.5 this year and 4.8 next year.
A robust recovery is expected in 2021 supported by ongoing vaccinations although large uncertainty remains, the Fund said in statement released at the end of its annual visit to Italy.
Continued policy support will be necessary until the recovery takes hold, IMF added.
Italys economy grew by 0.1 in the first quarter this year from the previous three months due to higher investments and inventories, national statistics bureau ISTAT said on Tuesday, sharply raising a preliminary estimate for a 0.4 contraction.
The unusually strong revisions, which took the country out of recession, increase the possibility of meeting the governments full year growth forecast of 4.5, following a 8.9 contraction last year when the economy was hobbled by coronavirus lockdowns.
The Fund said Italys budget deficit for 2021 was now seen at 11.8 of GDP, up from 8.8 projected in April, and in line with a governments estimate for a doubledigit deficit, which was last experienced in the early 1990s.
As the coronavirus crisis pushes up government…