A stop to Russian gas flows could result in a contraction in Italy’s gross home product (GDP) on common in 2022-2023, central financial institution Governor Ignazio Visco warned on Tuesday.
In the textual content of a speech ready for the Bank of Italy annual normal assembly, Visco highlighted how the Italian and German economies had been the worst hit by the Ukraine disaster given their excessive reliance on Russian gas and enormous, energy-intensive manufacturing sectors.
Visco mentioned that, previous to the battle, the Bank of Italy had anticipated the home economic system would increase on common by greater than 3% in 2022-2023.
“In April, we calculated that the protraction of the conflict in Ukraine could mean about 2 percentage points less growth overall, for this year and the next,” Visco mentioned
“However, more adverse developments cannot be ruled out. If the war should lead to an interruption in the supply of gas from Russia, GDP could decline on average over the two years.”
Visco warned that financial development remained key for Italy to maintain the burden of its public debt, including that the latest widening in yield spreads between Italian and German authorities bonds drew consideration to this component of “structural fragility”.
Source: Reuters (Reporting by Valentina Za, Gavin Jones and Stefano Bernabei; modifying by Agnieszka Flak)