Bossone, B., Cattaneo, M. & Zibordi, G. (2014) “Which Options for Mr. Renzi to Revive Italy and Save the Euro?“, Economonitor – A Rubini Global Economics Project, 03 Ιουλίου.
Since 2008, Italy’s industrial production has shrunk 25 per cent. In the last quarter of 2013, while exports reached back to almost the same level as in 2007, household consumption was down by about 8 per cent and investment by 26 per cent, with a capacity loss in manufacturing hovering around 15 per cent. Between 2007-2013 employment fell by more than a million, and the unemployment rate more than doubled (Banca d’Italia 2014a).
Last year the budget deficit remained stable at 3 per cent of GDP, while the 2.2 per cent primary surplus was the largest in the Eurozone, along with Germany’s. Yet public debt rose from 127.0 to 132.6 per cent of GDP (Banca d’Italia 2014b). In practice, Italy has to borrow even if it does not run any net-of-interest deficit. In broad numbers, every year it spends 800 billion euros a year, borrows 50 billions to cover deficits due to 85 billions in interest on a 2 trillion debt, and borrows 400 billions to roll over its maturing debt. By raising taxes to cut the deficit, Italy’s GDP has stopped growing in nominal terms six years ago, while debt has kept growing since.
Even if this situation were financially sustainable, it makes it impossible for Italy to grow out of its problems. The economy is straightjacketed. Creating new jobs and reabsorbing mass unemployment will not be achieved only through modest improvements in exports and timid jumps in expectations. Structural reforms (such as in justice, education, governance, and doing business), while necessary to modernize the country and improve the economic environment, won’t jumpstart any recovery any time soon, if at all.
Σχετικές αναρτήσεις:
- International Monetary Fund (2013) “Italy: Detailed Assessment of Observance of Basel Core Principles for Effective Banking Supervision”, IMF Country Report No. 13/354, Δεκέμβριος.
- Darvas, Z. (2013) “The euro area’s tightrope walk: debt and competitiveness in Italy and Spain”, Bruegel Organisation, 3 Σεπτεμβρίου.
- Bosco, A. & Verney, S. (2013) “Living Parallel Lives: Italy and Greece in an Age of Austerity“, South European Society and Politics, Vol. 18, Issue 4, 12 Φεβρουαρίου 2014.