Similar predictions from the EU, the International Monetary Fund and the Bank of Italy itself, albeit with the difference of a few decimals, foresee Italy's growth in 2019 as just 0.2%, by far the worst among the 28 European countries. Worker income could stimulate consumption but will have only a marginal effect of around 0.1%. Dismally, only one out of every three retirees will produce any stimulus at all.
The Italian Government's prediction of a 1% growth is, therefore, hotly refuted. But two leaders, Di Maio from M5S, and Salvini from League, created the forecast and say that "They never guessed one,” and that it is as if everyone was against Italy. Nobody understands why.
According to Pierre Moscovici, European Commissioner for Economic and Monetary Affairs, the whole of the EU is in recession, but Italy stands apart from all other countries, none of which has a forecast lower than 1.1%. The rest of the world fears Italy, not for power, which is what the government wants people to believe, but for its overwhelming economic weakness. Leaders fear Italy's recession may cause a domino effect that will impact other EU countries.
Italy is suffering from a weight of negative domestic factors. Uncertainties relating to "government policies" have caused a slowdown in domestic demand and a reduction in investments.
Measures introduced to alleviate the problem do not seem to be able to help the country overcome the crisis, caused by the slowdown of the global economy and, in particular, the German economy. Germany’s growth is predicted to level at 1.1%, the Eurozone, on the other hand, will grow by 1.3%, while other EU countries should grow by 1.5%.
According to the Minister of the Economy, Giovanni Tria, however, there is nothing to worry about. He reassured parliament saying Italy’s economy would slow down but would not go into a recession. "The negative factors are not destined to persist and there is a possibility of a gradual recovery of growth."
In Brussels, on the other hand, growth prospects were believed to be "subject to high uncertainty". And, if financing conditions of the private sector change, "the recession could be even more prolonged". In fact, the estimate of GDP growth for 2020 is calculated at 0.8%.
In the meantime, with the increase in the deficit and debt values, Italy’s budget could be back into violation of European rules. However, according to the European Commissioner, it is not yet time to talk about a corrective manoeuvre.