Italy's GDP will fall 0.6% in
2020 while the public debt will rise to 137% of GDP and the
budget deficit to 2.6% of GDP due to the coronavirus, according
to a new report from the International Monetary Fund dated March
11.
There is a risk that "if the infections were to continue to
increase" there could be a "deterioration in confidence" and a
further contraction of economic activity with the possible
"return of the nexus between sovereign debt and banks", the IMF
said.
The IMF praised the coronavirus response of the Italian
authorities and recommended "coordinated regional and
international action to tackle the effects of the pandemic".
It said Italy's response had been "rightly focused on
fighting the pandemic and supporting the health system, workers,
businesses and households".
The IMF said the next action should include "structural
reforms to boost productivity and investments, and a credible
medium term plan to consolidate the budget to put the debt on a
downwards trajectory, as well as measures to support the
financial sector".
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