MNI INTERVIEW: Italy's Misiani Sees Lower GDP As Covid Flares

Italy's economy is expected to grow less in 2021 than the government's October forecasts as the country braces for a third wave of Covid infections, even assuming a smooth roll-out of vaccinations, Italian Deputy Finance Minister Antonio Misiani told MNI on Friday.

"Italy's GDP growth for 2021 should be between 4.5% and 5%, less than the 6%-plus expected in October," said Misiani in an interview in which he also pointed to the challenges posed by the need to spend emergency European Covid funds. The most recent data indicates the economy contracted in the fourth quarter, he said.

While in October the economy seemed to be continuing its third quarter recovery, "November and December seem to have been complicated months," he said.

This year seems to be starting in a similarly complicated manner, Misiani said, adding that Italy will not achieve 2019 levels of GDP until the end of 2022 or the first half of 2023.

While Italy is currently second in the European Union in terms of Covid vaccinations per capita, differences within the country are a problem, with Lombardy, an engine of economic growth and home to financial centre Milan, lagging other parts of the nation.

"If Lombardy were aligned with the rhythm of other regions, we would be the best country in Europe," Misiani said.

The Finance Ministry's baseline growth scenario assumes vaccinations will continue at roughly the current pace.

"CHALLENGING TIMING" FOR EU FUNDS

Misiani called the European Union's EUR750 billion NextGenerationEU emergency funding package a "great opportunity and responsibility" for Italy, though he admitted that it would be a challenge to spend the money according to the timetables being set by Brussels.

"It is not inevitable that Italy will fail at spending the European funds" said Misiani, pointing to a major new bridge in Genoa as an example of infrastructure projects which Italy has a proven track record of carrying out efficiently.

Still, officials need to streamline procedures and fast-track NextGenEU projects, he said. They will also create a monitoring room to keep tabs of spending.

"The funds that we will not be using today won't come back again," he remarked.

The European funds should allow Italy "to not only recover from the pandemic, but also to return to sustainable and strong growth," Misiani said, noting that the country only grew 3.8% between 2000 and 2019, while the EU economy expanded by almost 30%.

"We can't return to the Italy of [the past], which was a country in stagnation. We have to return to a faster pace of growth," Misiani said.