ROME – Italy’s economy will grow by 3.8% this year, the Bank of Italy forecast on Friday, lowering a projection of 4.0% made just one month ago as a recent surge in coronavirus infections clouds the outlook.
The central bank said gross domestic product in the euro zone’s third largest economy probably rose by around 0.5% in the fourth quarter of last year from the previous three months, slowing sharply from the third quarter rate of 2.6%.
“Growth prospects are subject to numerous risks, mainly to the downside,” the central bank said in its quarterly forecasting bulletin, noting that the worsening COVID-19 situation had hurt consumer confidence.
The bank left its forecast for 2021 growth unchanged at 6.3%, following the record contraction of 8.9% in 2020, and said GDP would return to its pre-pandemic level around the middle of this year.
Turning to prices, the bulletin forecast that Italy’s EU-harmonised consumer price inflation rate would average 3.5% this year, slowing to 1.6% in 2023.
The employment situation in Italy is seen improving only marginally. The bulletin forecast the average jobless rate will fall from 9.4% last year to 9.0% in 2022 and 8.9% in 2023.