Modernization is key for Italy's economic recovery in 2021
In order for Italy to successfully recover from the effects of the COVID-19 pandemic, it must modernize its economy and receive assistance from the European Union (EU).
Italy’s economic recovery does not depend only on the abatement of the COVID-19 pandemic but also on the country’s ability to modernize in order to take the opportunity offered by the EU Recovery Fund. According to The Bank of Italy, the Italian economy is expected to grow by 3.5% in 2021, which is less than the 4.8% forecast previously reported. Moreover, its GDP is expected to remain weak at the start of 2021 but may increase throughout the remaining months. In fact, fiscal policy and the use of EU funds could boost Italy’s GDP by around 2.5 % over the 2021-2023 period. However, the increase of its GDP in 2021 will only partially offset last year’s collapse, making it vital for Italy to receive help from the European Union (EU).
Recovery Through Modernization
With the EU’s Recovery Plan, additional resources for investments in Italy should gradually flow in. Thus, in order to take full advantage of the Recovery Fund, Italy will have to adapt to both a green economy and a digital economy, which calls for a radical modernization of its production processes and the consumer economy.
Investing for the Future
Europe is also working to rebuild a generational pact that was previously interrupted in Italy in the mid-1980s with the explosion of the public debt. The Recovery Fund offers an opportunity to resolve this situation, starting with investments in sectors such as education, training, and research to help future generations. It will also join resources like the European Stability Mechanism (ESM), Support to mitigate Unemployment Risks in an Emergency (SURE), ECB interventions, and other European funds, reaching a total of almost 500 billion euros.Some of these resources are grants, while others are loans to be repaid at very low-interest rates, making them highly advantageous. Italy must use this opportunity to make radical changes and implement projects that are capable of finally putting the country back on the road to recovery and growth.
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