ROME, (Reuters) – The Italian economy, brought to its knees by the coronavirus, will contract by around 8.3% this year, national statistics bureau ISTAT said on Monday.
In its twice-yearly economic outlook report, ISTAT slashed its forecast from a projection of 0.6% growth made in December last year, before the start of Italy’s virus outbreak.
The epidemic has killed almost 34,000 people in Italy since it came to light on Feb. 21, the fourth highest death toll in the world.
A government lockdown to curb contagion shuttered the majority of factories and services for most of March and April.
“This year the GDP fall will be determined mainly by the drop domestic demand net of inventories,” ISTAT said, projecting that household spending would fall 8.7% and investments would collapse by 12.5%.
Its 2020 GDP forecast of -8.3% compares with projections of -9.2% by the Bank of Italy, -9.5% by European Commission and a -8.0% forecast made in April by the government of the anti-establishment 5-Star Movement and the centre-left Democratic Party.
The statistics bureau forecast than the economy would stage a partial rebound next year, with GDP growth of 4.6%.
It premised its forecast for this year on the assumption that the second quarter would post a steeper GDP drop than the 5.3% quarterly decline registered in the first three months, and that the economy would pick up in the second half of the year.
It also assumed there would be “no significant return of coronavirus contagion in the second half of the year.”
ISTAT forecast an average jobless rate of 9.6% this year, down from its December projection of 9.9%, with the decline in the unemployment rate caused by fewer people looking for work due to the economic slump.
Some 274,000 jobs were lost in April alone, ISTAT reported earlier this month, but the unemployment rate plummeted to 6.3%, the lowest for more than 12 years, as people stopped looking for work due to the coronavirus emergency.
(Reporting by Gavin Jones)