MILAN (AP) — The head of Italy’s central bank said Monday the eurozone’s third-largest economy could grow 4% this year, after shedding 9% during the pandemic year of 2020.

In the Bank of Italy governor's annual report on the economy, Ignazio Visco cited indications of industrial production regaining momentum and plans for fresh investments by companies alongside progress in the vaccination plans, which together could help accelerate the recovery.

He noted that Italian firms were in better shape going into the pandemic than the financial crisis more than a decade ago, and that significant European and government support measures were helping to spur the economy.

Italy is slated to be the largest single recipient of EU recovery funds, which Visco said “offers us the chance to improve how the public sector works, and to stimulate private enterprise and modernize the economy.”

The first country in the West hit by the virus, Italy suffered a whopping 12% decrease in economic production during the first six months of 2020. The economic impact was lighter during the fall surge, Visco noted, even if the health crisis was more severe, due both to more moderate restrictions and economic support from the government.

Consumption dropped by nearly 11% during 2020, as even families reporting no decrease in income held back and put more into savings, Visco noted. With the economic picture still uncertain, personal savings last year doubled, while the drop in spending was four times higher than the overall decline in available earnings.

“With the normalization of the health situation and less uncertainty, the high levels of savings accumulated could gradually translate into a rise in consumption,’’ he said.

Visco said “significant weaknesses” in Italy’s social welfare system were “laid bare by the pandemic.” He cited shortcomings in Italy’s job assistance centers, saying 1 in 10 Italians find work through job placement centers compared to 7 in 10 in Germany.