The economic recovery continues but is uneven worldwide
At the end of last year, the recovery strengthened in the United States and in other advanced countries, while GPD slowed markedly in the euro area. The resurgence of the pandemic and the persistent bottlenecks on the supply side are creating downside risks to growth. Inflation has risen further almost everywhere; in the euro area, it has reached its highest level since monetary union began, owing to the exceptional increases in energy prices. Eurosystem staff projections indicate that inflationary pressures will gradually subside in 2022.
The ECB has maintained an accommodative monetary policy stance; asset purchases will be reduced gradually
The ECB Governing Council judges that the progress on economic recovery and towards its medium-term inflation target permits a step-by-step reduction in the pace of its asset purchases. The monetary policy stance will remain accommodative, and flexibility and optionality will be maintained in the conduct of monetary policy in relation to the evolving macroeconomic outlook.
GDP growth has slowed in Italy; inflation is affected by rising energy prices
Based on Bank of Italy models, in the fourth quarter of 2021, GDP is estimated to have grown by around half a percentage point, slowing compared with the previous two quarters, when GDP staged a strong recovery. Employment continued to recover. Credit supply conditions remain relaxed; bank asset quality is still good. Inflation has risen, driven by energy prices; net of the volatile components, it remains moderate. The increases in production costs have only passed through to retail prices to a modest degree so far.
Expansionary public finance measures are planned for the three-years 2022-24
The available preliminary data for 2021 point to a decline in general government net borrowing compared with 2020 and with the Government’s latest estimates; the debt-to-GDP ratio is also estimated to have performed better than expected. The budgetary package for the three years 2022-24 is expansionary.
GDP is projected to continue to grow in the next three years; inflation will come down in the medium term
This Bulletin reports the macroeconomic projections for the Italian economy for the three years 2022-24. GDP is projected to return to pre-pandemic levels around the middle of this year; it is expected to increase by an annual average of 3.8 per cent in 2022 and at a slower pace in the following two years. Consumer prices are set to rise by 3.5 per cent on average this year, owing to rising energy prices, which nonetheless are expected to gradually decline by the end of the year; inflation will likely be moderate in the following two years. The projections are subject to considerable uncertainty. In the short term, this is linked to developments in the public health situation and to tensions on the supply side. In the medium term, the projections are still conditioned by the full implementation of the spending programmes in the budget and the complete and timely realization of the interventions under the NRRP.
