Italy has suffered a massive economic shock from the coronavirus pandemic, but its outlook now looks much brighter, with economists praising the work of Prime Minister Mario Draghi for much of this newfound economic stability.

“There is a boss and a sense of direction,” Gilles Moec, chief group economist at AXA Investment Managers, told CNBC on Thursday.

Draghi was sworn in as Italy’s prime minister almost a year ago, in February 2021, to lead a government made up of politicians from different parties and a few technocrats.

His aim was to provide stability to the nation at a time when traditional politicians could not agree on how to invest their EU recovery funds and ease the economic blow of the pandemic.

And it succeeded, according to economists.

“In 2021, Italy did pretty well,” said Moec.

While some of the growth was “mechanical catch-up” after the deep shock of 2020, there was also “real improvement”, he added.

Final GDP (gross domestic product) readings for 2021 are not expected until next month. But quarterly data points to an economic rebound in Italy throughout the past year.

And this despite the appearance of the highly infectious variant of omicron, a new strain of Covid discovered at the end of November, which led to a subsequent tightening of social restrictions.

“Despite a deceleration in services, quarterly growth [the fourth] quarter should have been enough to deliver average GDP growth of 6.3% in 2021,” Paolo Pizzoli, senior economist at ING, said in a research note on Thursday, following the release of strong production data. industrial.

Economists say available data does not yet fully reflect improvements, as there is a lag between policy implementation and economic impact.

However, there are two main structural reforms and one key factor so far that have eased some of the economic pressures during Draghi’s tenure, Guidogiorgio Bodrato, an economist at Berenberg, told CNBC on Thursday.

He cited judicial reform – approved in September and which could improve Italy’s attractiveness to foreign investors – and changes to public administration to speed up its efficiency.

“He was instrumental in getting the recovery money from Europe,” Bodrato also said of Draghi’s work.

Draghi’s first main task as prime minister was to draw up a plan for how the country would use EU funds, which total 191.5 billion euros ($216.68 billion). The plans were then approved by the European institutions. Disbursements of funds could only take place after the completion of these essential reforms.

“Draghi’s most important economic achievement was the writing of the [recovery] plan: a detailed multi-year commitment of investment and reform that must be followed by any government by 2026,” Luca Pennarola, European economist at BNP Paribas, said by email.

“This means that whatever government comes to power in the next few years will have to follow Draghi’s script in order to secure access to EU funds,” he added.

Now that Italy is set to choose a new president, with elections later this month, there are question marks as to whether that economic stability and performance could be compromised in some way. or another.

Indeed, Draghi himself is among the candidates for the presidential post, which would open the door to a new prime minister and, potentially, to a snap election. The role of the president is largely ceremonial in Italy while real power rests with the prime minister.

Despite the improvements, Italy are “still in a complicated position”, Moec said.

He noted that with interest rates set to rise this year, it could be increasingly costly for the Italian government to tap the markets to help its recovery.

This is a significant issue given that Italy has one of the highest debt levels in Europe.

“The final judgment will be how fast they spend EU money,” Moec added.

Additionally, the current government has an expiration date of 2023 with new legislative elections scheduled. Thus, the question of who will replace Draghi, if not imminent following the presidential vote, will inevitably resurface in a few months.

Meanwhile, there are already signs of friction within the ruling government. This includes the lack of unanimity on the need to introduce compulsory vaccinations in Italy.