Italy's Main Challenge Is To Boost Growth
In an interview, IMF mission chief for Italy Antonio Spilimbergo discusses the challenges facing the euro area’s fourth largest economy amid continued market turmoil in Europe and concerns about sovereign debt.
IMF Online Survey: Italy’s growth has been consistently below the euro area average over the past 10 years. What factors constrain Italy’s potential growth, and how can growth be jumpstarted?
Spilimbergo: This is an important question, currently very much at the center of the political and economic debate in Italy. The problem of disappointing growth has not only characterized the last few years; there has been a declining growth trend in Italy for more than a decade.
The reasons are complex and cannot be ascribed to one single factor. The good thing is that the government has begun to tackle a number of issues, including reforming the university system, which was recently implemented, and addressing some regulatory bottlenecks.
Other problems are more deep-seated and will require more time to solve. The industrial structure is based on small and medium enterprises, which served Italy well for a long time. But many of these companies have been unable to grow and withstand the challenges of internationalization.
Furthermore, the high level of business and service regulation still hinders competition. The tax burden is heavy, but the quality of public service is low. Regional income disparities remain substantial.
IMF Online Survey: The staff report calls for the creation of a National Commission for Growth. Is the National Reform Program introduced by the authorities not enough?
Spilimbergo: As I said, there are a variety of reasons why Italy’s growth is lagging. One of these is that the urgency and the nature of the needed structural reforms are not shared by everybody, and the reform agenda often ends up being the victim of political deadlock.
The National Reform Program is certainly an important step in the right direction. Looking ahead, a National Commission for Growth, by being independent from the political cycle, would foster consensus on the reform agenda and ensure that a technical and monitoring framework is in place to create continuity and ownership of the reforms.
IMF Online Survey: What risks do you see for the government’s fiscal...
To continue reading
Request your trial