READ full country note (PDF)
GDP is projected to grow by 1% in 2017 and 0.8% in 2018. Rising global demand and the recent depreciation of the euro are supporting exports. Business investment is strengthening, but public investment has not yet recovered. Private consumption growth remains robust despite slowing job creation and modest wage gains. Inflationary pressures are subdued because of large spare capacity, although recent energy and food price increases have pushed up consumer prices.
Lower interest payments due to accommodative euro area monetary policy have helped to expand fiscal room, and fiscal policy is projected to remain mildly expansionary in 2017. These projections assume a fiscal retrenchment of about 1% of GDP in 2018, as required by EU fiscal rules even though the economy is running well below its potential and the recovery is still fragile. Prioritising public spending on infrastructure, research and anti-poverty programmes, and continuing structural reforms would accelerate the recovery and raise potential output.
Italy's integration in global value chains remains limited, partly because many firms are small and suffer from low productivity. Moreover, the benefits from globalisation have not been equitably shared because of shortcomings in the education system, ineffective job-search and training programmes and ineffective anti-poverty programmes. Boosting innovation and competition and facilitating the restructuring of insolvent firms would enable companies to adjust to globalisation and raise participation in global value chains. Implementing the new active labour market policies and the nationwide anti-poverty programme will help people to adjust to globalisation.
Economic Survey of Italy (survey page)