27th assiom forex congress speech by the governor of the bank of italy ignazio visco 6 february 2021 the economic situation and the outlook the ongoing pandemic and the uncertainty over the public health, social and economic situation continue to affect consumption and investment decisions, with significant repercussions for the production system, employment and income. the marketing authorization of the first vaccines, granted at the end of 2020, gives hope that the health emergency can be countered effectively over the course of this year. however, the risks for the coming months still appear very substantial. the main one is that the containment of covid - 19 may prove to be more difficult than expected. moreover, it is not clear whether the changes that the pandemic has caused in consumer habits, in the organization of society and of production, and in the way people work will persist. the g20 ’ s cooperative response has made it possible to limit the economic impact of the health emergency. italy, which has taken over the g20 presidency for this year, will have the opportunity to work towards reaffirming a multilateral approach. global economic activity will be supported by the latest expansionary measures adopted by some advanced countries and by china ’ s robust recovery, which is also being facilitated by sizeable public investment. these factors, together with the agreement reached by the european union and the united kingdom last december, led the international monetary fund to revise its growth projections for the world economy for 2021 slightly upwards, to 5. 5 per cent, after the contraction of 3. 5 per cent recorded in 2020. in italy, the marked increase in production activity in the third quarter of 2020 demonstrated that the economy retains the capacity to bounce back. however, the second wave of infection, the resulting restrictions put in place to contain its spread, and heightened uncertainty led, as in other eu countries, to a new drop in gdp in the fourth quarter, equal to 2 per cent on the third quarter and to 6. 6 per cent compared with the year - earlier period. the experience gained so far has made it possible to limit its impact on the economy, in part thanks to more targeted containment measures and an improvement in the response capacity of the health system. after the strong but partial recovery in the number of hours worked in the summer months, employment is now being affected by the sudden worsening of the economic situation. since the beginning of 2020, the pandemic has had a significant impact on income and inequality. among

potential, defining the projects and their management in such a way as to permit their rapid realization, within the tight deadlines set out in the european programme and in accordance with the detailed operational guidelines of the european commission. this is no small challenge for the public administration. as much as it is vital for modernizing the production sector, if it is not accompanied by reforms that tackle the problems hindering development and private investment, the plan ’ s implementation risks being insufficient to guarantee a lasting increase in the pace of growth. it is not just a matter of formally adhering to the recommendations of the european commission, but rather of dealing concretely with problems that have been debated for years. the combination of the boost to potential gdp growth, made possible by a careful and targeted use of next generation eu funds, and the prolonged expansionary effects of monetary policy, offers italy the opportunity to aggressively tackle its high debt - to - gdp ratio as well. thanks to its relatively high residual maturity, the cost of the debt will remain low for a prolonged period of time, even after market and official rates have started to rise again. in these circumstances, if, as we have shown we can, the country succeeds in returning to a path of steady growth, the debt - to - gdp ratio could fall rapidly from the high point reached owing to the crisis. renewed confidence in the quality of policies and in the economic outlook could enable a further narrowing of the yield spread between italian and german ten - year bonds, which is still close to double that of spain and portugal. as the economy improves, an appropriate strategy to gradually rebalance the public accounts could strengthen these confidence effects and further accelerate the reduction in the debt - to - gdp ratio. the present difficulties must not prevent us from looking to the future. certainly, there are risks in the near term. yet by cultivating a longer - term vision, it is possible to do better than the trend projections suggest. mindful, decisive and effective answers are required for today ’ s very serious problems, greatly exacerbated by the pandemic but also reflecting existing structural gaps. closing these gaps will require a collective commitment, on the part of all firms operating in our economy, including those in the financial industry represented here, but also by the institutions on which economic policy action depends. extraordinary relief measures have been the necessary response for dealing with the most acute phases of the crisis. once the emergency is over, the measures designed to alleviate the difficulties of those hardest hit