Economic outlook, analysis and forecasts

Italy - Economic forecast summary (June 2016)

 

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GDP growth is expected to reach 1% in 2016 and 1.4% in 2017. Private consumption continues to be the main driver of the recovery. Employment growth has temporarily slowed but real income gains and pent-up demand are supporting household spending. Investment is turning around, providing some support to domestic demand, but constraints on the availability of bank credit still impede a faster investment recovery.


The government has reiterated its commitment to fiscal consolidation, but at a gradual pace, and to the structural reform programme. To generate the fiscal space for a much needed increase in public investment and avert the hike in indirect taxes programmed for 2017, it plans to use EU budget flexibility rules and to contain public spending. ECB monetary policy support and gradual fiscal consolidation have stabilised the debt-to-GDP ratio, which should start decreasing in 2017.


The collapse of investment in the wake of the crisis has exacerbated a long-standing labour productivity slowdown. Policy priorities to raise productivity involve speeding up the resolution of banks' non-performing loans, improving the selection process and execution of public infrastructure projects, raising public administration efficiency, and enhancing business dynamism and innovation.

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>>  Productivity country profile for Italy

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