Italy PM calls for EU "recovery bonds" to help virus-hit economies

All of Europe will be hit by a "hard, severe" recession brought on by the coronavirus pandemic, and special measures, including debt jointly issued by the European Union countries, are needed to mitigate its impact, Italian Prime Minister Giuseppe Conte said on Thursday. In an address to the Senate, Conte called for the launch of European "recovery bonds" aimed at financing "a courageous economic response" to the outbreak that has spread across the world.

"Europe would only be able to face the shock with extraordinary and exceptional measures," Conte said before an EU summit convened to discuss how far to go in rolling out emergency aid for the economies hit by the epidemic. Nine countries, including Italy, France and Spain, have called for mutual debt, but Germany, the Netherlands, Austria and Finland are opposed.

Italy has seen more fatalities from the infection than any other country -- figures released on Wednesday showed that 7,503 people had died in barely a month. Economy Minister Roberto Gualtieri told parliament this week that he expected a steep fall in gross domestic product in the first half of the year, and a full-year contraction of "a few percentage points".

A government source told Reuters the Treasury was estimating GDP would fall more than 3% for 2020, in a highly uncertain scenario subject to downside risks. Other forecasters are much more pessimistic. Goldman Sacks expects the euro zone's third-largest economy to shrink by 11.6% this year.

With Italy's economy on its knees due to the lockdown imposed to fight the outbreak, Conte promised a second stimulus package in April worth more than the 25 billion-euro package ($27.43 billion) adopted in March. The extra spending means Italy's 2020 budget deficit looks certain to climb above 4% of GDP, from the 2.2% target previously set in September and the 1.6% reported in 2019, which was the lowest in 12 years.

The ruling coalition of the anti-establishment 5-Star Movement and the centre-left Democratic Party will update its budget and growth forecasts in April. ($1 = 0.9115 euros)

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)