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Recovery fund: Italy faces ‘formidable’ post-Covid challenge, says central bank

Italy faces a "formidable challenge" as it tries to fix its long-ailing economy with the help of EU post-pandemic recovery funds, Italian central bank governor Ignazio Visco warned on Monday.

Recovery fund: Italy faces 'formidable' post-Covid challenge, says central bank
Many of Italy's tourism businesses are still closed at the end of May, though some - like this souvenir shop in Venice - have reopened. Photo: Marco Bertorello/AFP

The eurozone’s third-largest economy is due to receive loans and grants worth 191.5 billion euros ($233.5 billion) between 2021 and 2026, and its government has pledged a raft of reforms to put them to good use in its recovery plan (‘piano nazionale di ripresa e resilienza‘ or PNRR).

The support measures put in place include funds for renovating energy-inefficient buildings and plans to upgrade public transport and wifi connections, as Italy’s government says it aims to use the money to upgrade infrastructure and make Italy a “country for young people”.

READ ALSO: Fast trains and extended building bonus: How Italy’s EU recovery plan could affect you

The EU-funded national recovery plan “must be part of a collective effort, aimed at overcoming Italy’s structural weaknesses and the specific factors of the anaemic economic growth of the last two decades,” Visco said.

“The opportunities Italy will be able to offer future generations depend on the success of the reforms and measures of the National Recovery and Resilience Plan,” the governor stressed.

“It is a formidable challenge.”

Visco, delivering his annual speech on the state of the economy, also warned that Italy could not afford to maintain the economic support measures introduced to soften the impact of the current recession.

READ ALSO: 

“A future built on public subsidies and incentives is unthinkable,” he said, noting that public debt, standing at around 160 percent of gross domestic product (GDP), has reached the highest level since the end of World War I.

However, “the support measures for households and firms must be withdrawn gradually and only when the economic situation has been sufficiently consolidated and uncertainty significantly reduced,” the governor said.

Italy’s Prime Minister Mario Draghi, former head of the European Central Bank, is managing the country’s economic recovery plan. Photo: Luis Vieira/POOL/AFP

Italy was the first country in Europe to be hit by the coronavirus pandemic, triggering the worst slump in its postwar era.

The economy contracted by 8.9 percent last year and a million jobs have been lost, with many more expected if the country’s current ban on redundancies is not extended next month.

Visco said that as the country continues to make progress with vaccinations and reopenings of the economy, he expected an accelerated recovery, with GDP expanding by more than four percent in 2021.

His expectations are broadly in line with government forecasts of annual GDP growth of 4.5 percent this year and 4.8 per cent in 2022, although Prime Minister Mario Draghi said earlier this month that they could be revised upwards.

After months of lockdown gloom, delays in vaccinations and a persistently high number of virus fatalities, things have started to look up in Italy, just in time for the onset of the summer season.

READ ALSO: Italy’s coronavirus infection rate falls to lowest level since October

On Sunday, the country recorded 44 Covid-19 deaths, the lowest daily tally in more than seven months, while the government said 20 percent of the population had been fully vaccinated.

Meanwhile, coronavirus curfews were lifted from Monday in three regions with low infection figures, including tourist favourite Sardinia.

It’s hoped that the same easing of measures could be extended across most of the country in coming weeks.

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COVID-19

Covid-19: Are Italian live events at risk of being postponed?

As the infection rate rises sharply across the country, Italian virologists are calling for concerts and festivals to be rescheduled.

Covid-19: Are Italian live events at risk of being postponed?

Italy has seen a large increase in the number of Covid-19 cases in recent days, so much so that a number of virologists across the country are now urging the government to postpone major live events in a bid to curb infections. 

According to a new report by Italy’s independent health watchdog, the Gimbe Foundation, 595,349 new cases were recorded in the week from June 29th to July 5th; a worrying 55 percent increase on the previous week. 

In the same time span, the country also registered a 32.8 percent rise in the number of hospitalised patients, which went from 6,035 to 8,003.  

The latest Covid wave, which is being driven by the highly contagious Omicron 5 variant, is a “real cause for concern”, especially in terms of a “potential patient overload”, said Nino Cartabellotta, president of the Gimbe Foundation. 

As Italian cities prepare to host a packed calendar of concerts and festivals this summer, health experts are questioning whether such events should actually take place given the high risk of transmission associated with mass gatherings.

READ ALSO: What tourists in Italy need to know if they get Covid-19

“Rescheduling these types of events would be the best thing to do right now,” said Massimo Ciccozzi, Director of Epidemiology at Campus Bio-Medico University of Rome. 

The summer wave is expected to peak in mid-July but, Ciccozzi warns, the upcoming live events might “delay [the peak] until the end of July or even beyond” and extend the infection curve.

Antonello Maruotti, Professor of Statistics at LUMSA University of Rome, recently shared Ciccozzi’s concerns, saying that live events as big as Maneskin’s scheduled Rome concert are “definitely not a good idea”. 

The Italian rock band are slated to perform at the Circus Maximus on Saturday, July 9th but the expected turnout – over 70,000 fans are set to attend the event – has raised objections from an array of Italian doctors, with some warning that the concert might cause as many as 20,000 new cases.

If it were to materialise, the prospected scenario would significantly aggravate Lazio’s present medical predicament as there are currently over 186,000 Covid cases in the region (nearly 800 patients are receiving treatment in local hospitals). 

Italian rock band Maneskin performing in Turin

Italian rock band Maneskin are expected to perform at the Circus Maximus in Rome on Saturday, July 9th. Photo by Marco BERTORELLO / AFP

But, despite pleas to postpone the event, it is likely that Maneskin’s concert will take place as scheduled.

Alessandro Onorato, Rome’s Tourism Councillor, said that rescheduling is “out of question” and that “all recommendations from the local medical authorities will be adopted” with the help of the event’s organisers and staff on the ground.

At the time of writing, there is also no indication that the Italian government will consider postponing other major live events scheduled to take place in the coming weeks, though the situation is evolving rapidly and a U-turn on previous dispositions can’t be ruled out.

READ ALSO: At a glance: What are the Covid-19 rules in Italy now?

On this note, it is worth mentioning that Italy has now scrapped all of its former Covid measures except the requirement to wear FFP2 face masks on public transport (though not on planes) and in healthcare settings.

The use of face coverings is, however, still recommended in all crowded areas, including outdoors – exactly the point that leading Italian doctors are stressing in the hope that live events will not lead to large-scale infection.

Antonio Magi, President of Rome’s OMCEO (College of Doctors, Surgeons and Dentists), said: “Our advice is to wear FFP2 masks […] in high-risk situations.”

“I hope that young people will heed our recommendations and think about the health risks that their parents or grandparents might be exposed to after the event [they attend].”

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