Economic growth in Italy will be stronger than forecast this year, according to business lobby Confindustria, due to the impact of the Delta variant being more contained and more robust economic indicators.

Confindustria’s research unit CSC predicts GDP will rise 6.1% in 2021 and 4.1% in 2022, surpassing pre-pandemic levels in the first half of next year.

Back in April, the unit said Italy’s GDP would increase 4.1% in 2021. The forecasts for this year are now just over the 6% figure predicted by Mario Draghi’s government.

In 2020, the coronavirus-ravaged economy contracted by 8.9%, the sharpest recession in the country’s post-war history, says a Global Banking and Finance Review report. The strong rally will likely lead to lower than forecast public deficit and debt ratios this year.

Furthermore, the CSC report warned that GDP growth would have a more “moderate profile” starting from Q4 this year.

It said its estimates considered the country’s multi-billion Euro recovery plan, which is in part funded by the European Union.

The report went on to say that despite the “positive perspectives” the forecast has downside risks associated with potential new coronavirus restrictions, the lack of raw materials that could hamper production and increased structural inflation.

Confindustria President Carlo Bonomi said that recovery was well underway but that it was important to “keep the guard up”.

“Italy must go back to growing at a yearly pace of at least 1.5-2%, an achievable goal, equal to the annual growth registered between 1997 and 2007,” he said.

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