Ignazio Visco: Overview of economic and financial developments in Italy

Concluding remarks by Mr Ignazio Visco, Governor of the Bank of Italy, at a meeting for the presentation of the Annual Report 2020 - 127th Financial Year, Bank of Italy, Rome, 31 May 2021.

The views expressed in this speech are those of the speaker and not the view of the BIS.

Ladies and Gentlemen,

The pandemic has had a very high cost in terms of human lives the world over. Keeping it under control has called for restrictions on individual freedoms and has deeply affected all of our lives. Many people have lost their jobs; our interpersonal relationships and the ways in which we study, produce and work, and spend our free time have changed.

From an economic perspective, the ensuing recession is the worst since the end of the Second World War. In 2020, global GDP declined by 3.3 per cent, with uneven effects across the various geographical areas, productive sectors, firms, and households. There was an even greater decline, of almost 9 per cent, in world trade, characterized by the temporary halt of production chains and a sharp fall in tourism flows. Job losses hit young people, women and temporary workers the hardest. For the first time in over twenty years, it is estimated that the number of people living in extreme poverty has begun to climb again, today accounting for about 10 per cent of the population according to the World Bank, with an increase of more than 100 million people in the last year.

Without the decisive and rapid economic policy responses, the damage would have been more serious. Cooperation between countries and coordination among the monetary and fiscal authorities marked a clear change of direction compared with the recent past. By last March, governments had approved spending increases, tax reductions and loan guarantees, valued at more than $16 trillion, equivalent to 15 per cent of global GDP, with the immediate objective of strengthening health systems and supporting household income and credit to firms. The prompt provision and exceptional quantity of liquidity provided by the central banks staved off tensions in the markets and restored broadly accommodative financial conditions. The measures enacted prevented a generalized tightening of credit, thus averting the risk of a spiralling crisis.