Economic crisis in Italy
Table des matières
I. Introduction
Italy is facing strong imbalances on a macroeconomic point of view, and that requires special policy actions in order to restore an economic balance in this country, currently struggling in an economic crisis. The main problems are the huge public debt held and the lack of external competitiveness. Both those problem are originally caused by the extremely slow economic productivity growth of the country.
Given the fact that the Italian economy has a relatively important role in the European economy, it is urgent to put in motion some policies in order to avoid risks of negative effects on Italian such as European economy.
Italy, to recover as quickly as possible from that crisis, will have to face some major challenges. To get rid of that major debt they are holding, they will have to sustain very high primary surpluses. They also will have to reinforce their GDP and keep it growing for a long period. In terms of fiscal objectives, Italy has made many improvements in 2013 but it might be insufficient given the scale of the public debt ratio. On the following graph, we can follow the evolution of the Italian government debt as percentage of the GDP. Figure 1 (Alhambra Investment Partners 2011). The part that interest us is on the right, from the financial crisis in 2008. We can observe that the debt has been growing tremendously since then but the national GDP did not follow.
Figure 1: General Government Debt Italy, as % of GDP
The roots of this crisis are to be found in the lack of competitiveness that Italy has been experiencing over the last years. This lack of competitiveness happened because of wrong alignment of wages and salaries, too high labour taxes and a bad export system, too expensive for a large amount of small companies who therefor could not compete internationally.
Italy faces many other problems such as corruption, inefficiencies in the judicial system and in the
I. Introduction
Italy is facing strong imbalances on a macroeconomic point of view, and that requires special policy actions in order to restore an economic balance in this country, currently struggling in an economic crisis. The main problems are the huge public debt held and the lack of external competitiveness. Both those problem are originally caused by the extremely slow economic productivity growth of the country.
Given the fact that the Italian economy has a relatively important role in the European economy, it is urgent to put in motion some policies in order to avoid risks of negative effects on Italian such as European economy.
Italy, to recover as quickly as possible from that crisis, will have to face some major challenges. To get rid of that major debt they are holding, they will have to sustain very high primary surpluses. They also will have to reinforce their GDP and keep it growing for a long period. In terms of fiscal objectives, Italy has made many improvements in 2013 but it might be insufficient given the scale of the public debt ratio. On the following graph, we can follow the evolution of the Italian government debt as percentage of the GDP. Figure 1 (Alhambra Investment Partners 2011). The part that interest us is on the right, from the financial crisis in 2008. We can observe that the debt has been growing tremendously since then but the national GDP did not follow.
Figure 1: General Government Debt Italy, as % of GDP
The roots of this crisis are to be found in the lack of competitiveness that Italy has been experiencing over the last years. This lack of competitiveness happened because of wrong alignment of wages and salaries, too high labour taxes and a bad export system, too expensive for a large amount of small companies who therefor could not compete internationally.
Italy faces many other problems such as corruption, inefficiencies in the judicial system and in the
Bibliography: http://trends.levif.be/economie/actualite/politique-economique/la-dette-publique-italienne-bat-des-records/article-1194754562203.htm https://fbkfinanzwirtschaft.wordpress.com/2011/06/30/can-italy-grow-its-way-out-of-debt/ http://www.voxeu.org/article/export-shares-price-competitiveness-and-spanish-paradox