Italy employers body slashes 2022 growth forecast due to shock from Ukraine war

Article content

MILAN — Italy’s employers association Confindustria on Saturday slashed its growth forecast for the economy in 2022 to 1.9% from an estimate of 4.1% given in October, citing the impact of a “deep supply shock” following Russia’s invasion of Ukraine.

In a report, the association’s research unit CSC forecast gross domestic product (GDP) would rise 1.6% next year, adding the worsened scenario would postpone a return to levels seen before the coronavirus pandemic – initially expected in the second quarter of 2022 – to the first months of next year.

Article content

The new forecasts are based on the assumption that the war in Ukraine ends by June, or at least that the economic uncertainties diminish, but the numbers would likely weaken further should the conflict persist until the end of this year, or even spill into 2023, the industry association added.

“Even in the least complicated scenario the numbers that came out of the study are frightening, very frightening,” Confindustria chief Carlo Bonomi told journalists.

The association said the military crisis added to an economic environment already pressured by the continuing coronavirus pandemic, rising commodity prices and bottlenecks in global supply chains.

It also warned that some targets set as part of Rome’s Recovery and Resilience Plan (PNRR) were at risk and needed to be revisited, as some projects were hard to execute given the increase in commodity prices and scarcity of some raw materials.

Prime Minister Mario Draghi’s government is preparing to slash its 2022 growth forecast to 2.8% or 2.9% from a previous 4.7% goal made in September, sources told Reuters this week, citing surging energy costs and the Ukraine turmoil.

However, the growth forecasts are based on an unchanged policy scenario and so do not include the impact of new supportive measures to be announced by the government at a later stage. For this reason, the final official GDP targets are likely to be somewhat more ambitious . (Reporting by Agnieszka Flak; editing by Clelia Oziel)