Italy: New Government Decree Sets A Path To Reopening

Opening times for restaurants, a hot topic in the domestic political debate, will also be extended from Monday 26 April, but only in yellow zones. Restaurants will be open both for lunch and for dinner, but only for open-air tables. Indoor consumption of meals will be allowed again from 1 June.

Draghi is taking a risk, as a broad-based resurgence of cases could jeopardize the tourism season

By anticipating the start of progressive reopenings, Prime Minister Mario Draghi is responding to pressures from parts of his variegated majority, most notably the League, Forza Italia, and Italia Viva, pressed by popular unease. In doing so, he is taking a “calculated risk”, as Draghi himself puts it, likely leveraging on the vaccination trade-off. On the one hand, developments on the pandemic front show slow declines in new infections and in hospitalization data, with stubbornly high death tolls. On the other hand, Draghi can now leverage on improvements in the vaccination campaign front. The latest data shows that some 7.7% of Italians are now fully vaccinated and 18.6% has received at least one dose; at 340K yesterday, the number of daily vaccinations is still short of the 500K end-of-April target, but is moving towards it at a decent, if not ideal, speed. Draghi’s bet is that imminent reopenings following the passage of regions in the yellow bracket will not cause a new wave of infections (or at least put pressure on hospitals) strong enough to require a new wave of restrictions and soft lockdowns. This is a crucial assumption, as the alternative negative outcome would risk jeopardizing the start of the imminent summer tourism season.

The combined effect of earlier reopenings, and extra fiscal push to be disclosed soon, should in principle increase the odds of higher growth for 2021. Risks to our current 3.3% GDP growth forecasts are now tilted to the upside, provided Draghi’s bet is won.

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Disclaimer: This publication has been prepared by the Economic and Financial Analysis Division of ING Bank N.V. (“ING”) solely for information purposes without regard to any ...

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