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Italy Economic Snapshot

Economic Forecast Summary (June 2022)

After a sharp 6.6% rebound in 2021, Italy’s GDP growth will be hit by the war. Growth is expected to be 2.5% in 2022, supported by strong base effects, and 1.2% in 2023. Persistent war-related inflationary pressures and uncertainty will hold back household consumption, slowing the recovery in services. New incentives for the private sector and the National Recovery and Resilience Plan will mitigate some of the negative impact of supply disruptions and uncertainty on investment. With gas constituting 42% of total energy consumption, the main risks to the outlook are energy prices and supplies. Sharply higher bond yields could also lower growth.

Economic Survey of Italy (September 2021)

Italy’s economy is recovering steadily from the COVID crisis, thanks to the vaccination campaign and generous fiscal support to households and firms. Risks to the outlook are large, including virus variants and the path of global interest rates. To raise growth and employment above pre-pandemic levels, the composition of public spending and taxes must improve. Together with implementation of the National Recovery and Resilience Plan, which includes critical structural reforms and investments, this can help support a faster transition towards a greener, more digitised economy. Realising this will require a demanding set of legislative and administrative reforms. Improving civil justice, tax administration and public investment will be essential to raise income growth.

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Reform Priorities (April 2021)

Going for Growth 2021 - Italy

Many of Italy's structural challenges - the significant divides across regions, age, gender and productivity, as well as high levels of public debt - have been compounded by the COVID-19 crisis. The key priority for the recovery is to enhance the public administration's effectiveness. This should include, in particular, public investment governance and improved co-ordination and implementation across different levels of government.

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2021 Structural Reform Priorities

  • Infrastructure: Improve implementation, management and prioritisation of quality public investment
  • Governance and rule of law: Improve the efficiency and effectiveness of the public administration
  • Labour market: Ready the workforce with improved education, public employment and labour market activation services
  • Tax system: Improve the efficiency and equity of the tax structure
  • Competition and regulation: Raise productivity and innovation

 

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