Italy's GDP may fall 9-13% in 2020

Italian economy might overall shrink between 9 percent, in a basic scenario, and 13 percent in a negative one, in 2020, said Italy's central bank governor on Friday.

At the central bank's annual meeting, Ignazio Visco, governor of the Bank of Italy said timing and strength of Italy's economic recovery after the coronavirus emergency would depend on factors still hard to predict.

"The (COVID-19) pandemic and the recession open extremely uncertain scenarios, which make it very difficult to outline how the new balances will be defined," said Visco.

According to the governor, the second scenario was based on negative "but not extreme" perspectives on the evolution of the pandemic, on the scope of the drop in global trade, and on the seriousness of financial conditions' deterioration.

Delivering his traditional final considerations to a half-empty conference room due to the strict safety rules against contagion, the governor explained Italy needed to face this uncertain future with a solid plan of reforms.

"Uncertainty is all the more reason for strengthening our economy from the beginning, and for moving along a comprehensive plan of reforms," Visco stressed.

He specified that "policies, reforms, and behaviors that bring (Italy) towards a sustained, sustainable, and well-balanced growth" would also help keep financial markets steady.

At a global level, Visco, who is also a member of the Governing Council of the European Central Bank, acknowledged the effects of the pandemic on productive activities have been strong so far, and those in the future would not be easy to predict.

"They (the future effects) will depend firstly on non-economic factors, such as the evolution of the contagion -- with possible new outbreaks -- the length of containment measures, the scope and effectiveness of support policies put in place by the various countries, and on the confidence among households and companies," he explained.

Also on Friday, the National Institute of Statistics (ISTAT) stated the Italian gross domestic product (GDP) contracted by 5.3 percent in the first quarter of 2020, thus revising downward a preliminary estimate of 4.7 percent.

In his address, Visco said the recession would not put in danger the sustainability of Italy's public debt (at 134.8 percent of GDP in 2019, it was the second-largest in the European Union after that of Greece).

However, he warned the GDP might drop even more in the second quarter of 2020, "according to the available indicators," since this period included more weeks covered by the nationwide lockdown imposed due to the pandemic.

Italy officially registered the COVID-19 outbreak on Feb. 21. The government imposed a full lockdown on March 10 and started lifting some restrictions on economic activities and personal movements on May 4.