News Analysis: Economic forecasting in Italy challenging amid pandemic

ROME, Jan. 27 (Xinhua) -- Amid political turmoil and uncertainty connected to the coronavirus pandemic, economists say predicting Italy's economic performance in the near- or medium-term amounts to a guessing game.

Earlier this month, Italy's Finance Ministry predicted the country's economy will grow by 6.0 percent compared to last year. That is more optimistic than other forecasts -- the research branch of Banca Intesa Sanpaolo in early January predicted 4.7-percent economic growth for the year, which is higher than the 3.0-percent estimate this week from the International Monetary Fund.

But according to most analysts, there is too much uncertainty to accurately predict how the economy will perform for the year as a whole.

"We are in a one-of-a-kind situation," Francesco Saraceno, a professor of political economics at LUISS University in Rome and deputy director of the university's research center, told Xinhua.

"Even going back to the global financial crisis of 2008... But the world knew how to address that kind of problem: keep the financial sector afloat and provide economic stimulus. Today the problems are varied and they impact every aspect of the economy," he said.

Alessandro Polli, a professor of economic statistics at Rome's La Sapienza University, agreed.

"The coronavirus vaccinations are a key, but right now we have no idea how long it will take to vaccinate enough people in Italy," Polli said in an interview. "We don't know how stable the political situation will be going forward, or how strong companies will be when they emerge from the pandemic once it is over."

But an unexpected and potentially larger problem, Polli said, is the psychological impact of the pandemic, which first started impacting the Italian economy nearly a year ago and which, as of Wednesday, has infected more than 2.5 million people in Italy and claimed nearly 87,000 lives.

"When this is all over, are people going to rush to take a vacation or to buy a new car?" Polli asked. "Nobody can see the future, but my guess is that even when the pandemic is under control, the restart could be very gradual."

Polli and Saraceno both said that on a macroeconomic level, economic figures will benefit in comparison to weak figures from last year. The economic weight of the pandemic started to be felt last year in late February and March, meaning it had an impact on the first-quarter growth. The second quarter of the year -- from April to June -- was the darkest period of the pandemic in Italy, meaning that unless things take a turn for the worst, the second quarter of this year should look good by comparison.

"We're still under partial lockdown, but it's clear the latest lockdowns have been less costly than the first one," Saraceno said.

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