The Italian Mind

Reflections from the Boot

Archive for the category “Economy”

Italy’s GDP Growth Slower Than Expected

Italy’s Recession Graph

During his intervention at the annual Ambrosetti Workshop in Cernobbio on Lake Como, the Italian Prime Minister Mario Monti referred to the upcoming elections of next May saying it is “inconceivable that a democratic country as Italy cannot find qualified candidates on the ballot to lead the country”. Monti declined the opportunity to run for another mandate as PM, his current appointment ending in 2013.
These words are paramount to recent news about the slower growth of Italian GDP, which recorded a contraction, based on the data published yesterday by the Italian Institute of Statistics (ISTAT). The fourth successive contraction has raised concerns about the ability the government of technocrats has to get public finances back on track. Gross Domestic Product dropped 2.6 percent compared to the estimate of 2.5 percent on an annual basis. In spite of that, the Prime Minister has shown optimism. “The data available do not reveal an economic recovery has started yet – Monti said – but it is now within reach and I believe it will soon arrive,” he added.
So far, Monti’s cabinet choices – however hard to withstand for many tax-overladen Italians – have only succeded in cutting consumer spending and boosting unemployment, thus slowing GDP growth. The Italian economy has been contracting for four straight quarters now and its recession will very likely continue during 2013.


Will Italy Overcome the Crisis and Make it to Next Year Elections?

Italy’s spending cuts are at the heart of reforms

“Recession in Italy is close to an end and the euro zone must not represent a source of friction amongst northern and southern Europe”, the Italian Prime Minister Mario Monti said recently at a conference in Rimini. He also added that the euro zone’s third largest economy is in better shape than it was actually a year ago.
Since taking over from Silvio Berlusconi, Monti has triggered a programme of reforms, including strong overhauls on the labour market and pension, spending cuts and deregulation. Monti said the government would not expected such reforms to stimulate the growth of a heavily-hit economy in the short term. Instead, he explained he had hoped the falling of borrowing costs would make it simpler for recovery to commence.
Monti also repeated once again he is concerned for the tensions arisen among northern and southern European countries in the euro zone, and the Union is endevouring to resolve its recession and preserve the single currency.
“It would be tragic – he said- if the euro, the highest form of European aspiration to integration and unity turned out to be a factor of disintegration, and the cause for prejudices, of north standing against south”.
Internally, Monti has underlined once ahgain that budget-rigour goal is instrumental to the growth of public finances. The Government will focus on debt reduction and asset sales among the coming months as it puts together measures to raise competition, put an end to energy costs and support start-up companies. Monti, who imposed austerity in the initial half of his 18-month term, is asking his ministers to draft policies in order to pull Italy out of its fourth recession in almost ten years. He is well known as one who jumped in in Italy’s deficit with both feet and lowered money borrowing costs thanks to a program that included tax increases on fuel, real estate and luxury goods, all vastly unpopular among the population. The Minister for Economic Development, Corrado Passera – however – didn’t say whenever the new government measures to promote the economy could be finalised.

Italy and the Economic Crisis

While the world economic crisis is hovering over major economic centres all over Europe and North America, the German magazine Der Spiegel has intervied the Italian Prime Minister Mario Monti on the issue.
He warned of a potential breakup of Europe if greater and quicker efforts are deployed to lower government borrowing costs, as a stand-off over European Central Bank help for Italy and Spain hardened.
‘Disagreements within the 17-nation euro area are detracting from the policy response to the debt crisis and undermining the future of the European Union’, Mr.Monti added.
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