Economy

Economic Survey of Italy 2013

 

Overview of the Economic Survey of Italy in English (in Italian)

OECD Economic Surveys: Italy 2013 | OECD Free preview | Powered by Keepeek Digital Asset Management Solution

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Remarks by OECD Secretary-General Angel Gurría (in italian)

Italy has embarked on a wide-ranging strategy to restore fiscal sustainability and improve long-term growth. Combined with measures at the euro area level, these welcome actions have reduced downside risks and the economy should emerge from recession during 2013. However, with the public debt-to-GDP ratio nearing 130% and a heavy debt redemption schedule, Italy remains exposed to sudden changes in financial market sentiment. Large and sustained reductions in public debt are therefore the top fiscal priority.The gains from recent structural reforms must also be consolidated and further measures to promote growth and improve competitiveness need to be implemented, to return Italy to healthy growth.


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Sizeable fiscal consolidation was achieved in 2012. While this entailed short-term output and social costs, these efforts have been rewarded by higher confidence in financial markets and have improved medium-term prospects. The government has rightly aimed to halt the rise in the public debt-to-GDP ratio and put it on a downward path, while also seeking ways to use limited resources to protect the incomes of the most vulnerable. This could be achieved either with a balanced government budget or a small fiscal surplus, accompanied by a combination of growth-enhancing structural reforms and the implementation of the new unemployment insurance scheme. While additional fiscal tightening would have transitory negative effects on output, it would be rewarded by faster debt reduction and thus lower risk of renewed financial-market reactions. Fiscal measures should concentrate on spending restraint, and an ongoing policy reviewprocess should focus on improving value for money. There is also scope to restructure the tax system to reduce economic distortions, notably through fewer tax expenditures. While the banking system has been overall quite resilient, several banks are experiencing serious difficulties, and the financial sector remains exposed to systemic risks. Ongoing efforts to strengthen capital adequacy and loss provisions are thus essential.

Comprehensive structural reforms have been adopted, which over time will increase Italy’s persistently weak productivity growth and, together with modest wage growth, bring much-needed improvement in international competitiveness. The immediate focus for policy in product and labour markets should be on full implementation, monitoring measures for their effect, and making improvement where needed. Future reforms, in carefully planned and co-ordinated legislation, will need to remove remaining restrictions in professional and public services and promote a more inclusive labour market. This requires helpingworkers with job-search and training, co-ordinated together with income support for the unemployed, whose families are most at risk from the increased poverty that prolonged recession has brought. A new framework is needed within which the economy can adjust more quickly to global changes in trade patterns and innovative technologies.  Good public governance is important for economic growth.

Steps have been taken for the public administration and civil justice systems to support reform, economic development and the needs of civil society more effectively. These too should be followed through and fully implemented to eliminate major impediments in the business environment. The streamlined civil justice system needs to ensure that, where regulatory constraints are necessary, such as to protect employment rights or the environment, the law is enforced resolutely, rapidly and equitably.The anti-corruption lawprovides improved tools in the fight against corruption and organised crime. Continued emphasis on transparency in public administration at all levels will help and would be bolstered by a freedom of information act.

 

For further information please contact the Italy Desk at the OECD Economics Department.

The OECD Secretariat's report was prepared by Paul O'Brien, Oliver Denk under the supervision of Patrick Lenain. Research assistance was provided by Josette Rabesona.

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