NEWS » The Italian economy is picking up speed?
The Italian economy is picking up speed?
Is the Italian economy picking up speed? ISTAT, the national statistics agency stated in its monthly report that the Italian economy is accelerating, driven by the widespread improvement in economic sectors and rising employment.
This is quite surprising news if we consider that in the last year, Italy has had the worst performance in the single-currency area countries. Conversely, the gap between Italy and the rest of Europe has been narrowing: ISTAT reported a 4.4% year-on-year increase in industrial output and unemployment rate has fallen 0.4 percentage points during the second quarter of the year to 11.2%. Currently, Italian GDP is growing at 1.5% a year. That is still a little less than the 2.2%, achieved by the euro zone as a whole.
As Italy’s prime minister, Paolo Gentiloni said the rise in industrial production would have been unthinkable only two years ago.
However, these encouraging signs of recovery are threatened by the usual underlying problems of the country, such as low productivity, very-high public debt, a fragmented banking system, too few big corporations and the consequent limited competition, slow civil justice and underfunded, underperforming universities.
Moreover, according to the International Monetary Fund the salaries and wealth of working-age Italian people has dropped below the level of 1995, before the introduction of the euro. Per-capita salary levels will not get back to pre-crisis levels for a decade. The proportion of Italians at risk of poverty had climbed to 29%, with a peak of 44% in the south.
So how was the current recovery possible? According to experts Italy is, benefiting from the broader upswing in Europe. Germany and France, the strongest economies of the eurozone are the biggest customers of the Italian export market, which is the main economic drive. Also, A state bail-out in July of Italy’s oldest bank, Monte dei Paschi di Siena, and the rescue of two lenders in the Veneto region has significantly helped the financial situation.
Arguably, the biggest potential difficulty is not economic, but political. Italy is still far away from having governments with agreed programmes and stable majorities. Italy’s next elections in May, is not likely to provide this kind of stability, due to the fact that its electoral law is largely based a on proportional representation, and the country lacks a strong political movement able to receive broad support.