OECD

Italy: Fiscal consolidation needed

The severe recession in Italy started earlier than elsewhere but activity rebounded in the third quarter. Improved financial conditions have helped rebuild confidence and bolster domestic demand. The saving ratio, estimated to have risen substantially in 2009, is projected to fall back only slightly; consumption will be a more significant factor in growth during 2011. Further support to exports will come from the recovery in world trade. Higher unit labour costs, despite some falls in wage costs, and the oil price upturn will moderate the decline in inflation, even as unemployment rises somewhat further.

Given high public debt, Italy did not introduce a large-scale fiscal stimulus. Nonetheless, with cyclically weak revenues, the deficit exceeds 5% of GDP and debt is set to increase to 120% of GDP by 2011. Significant fiscal consolidation efforts will thus be required from 2011 onwards, as growth picks up.

©OECD Observer 2010




Economic data

E-Newsletter

Stay up-to-date with the latest news from the OECD by signing up for our e-newsletter :

Twitter feed

Editor's choice

  • Internet policy video
  • As the Internet transforms the way people, businesses, and economies work, what policies do governments need to implement so that everyone benefits from the digital economy?
  • "About 53% of foreign bribery cases involved corporate management or CEOs." Read more in the OECD Foreign Bribery Report
  • France 24 – Eurozone weakness threatens global economy: The Eurozone could get stuck in a “stagnation trap" without decisive action and poses a risk to the entire global economy.
  • [Video] If Africa aided Norway: Radi-aid challenges clichés.
  • [VIDEO] Migration is constantly evolving. Around one in ten people in the developed world today is an immigrant. And over the past decade, migrants have accounted for 70% of the increase in the working-age population in the OECD area, according to the OECD’s latest International Migration Outlook.
  • More fiscal stimulus could help Japan: speaking with CNBC, Randall Jones, Head of Japan/Korea Desk at OECD, warns that Japan needs a detailed and credible fiscal consolidation plan.
  • Modest global economic forecasts, continuing high unemployment and serious downside risks should spur governments with a greater sense of urgency to fully employ monetary, fiscal and structural policy levers to support growth, notably in Europe, according to the OECD’s latest Economic Outlook.
  • OECD Employment Outlook 2014: The OECD Employment Outlook 2014 includes chapters on recent labour market developments with a special section on earnings, job quality, youth employment, and forms of employment and employment protection.
  • Try our latest OECD Observer crossword!
  • Better Life Index
    How do you measure a Better Life? The OECD has launched a new interactive infographic where visitors can explore the priorities of people worldwide. Be a part of it. Create and share your Better Life Index.

Most Popular Articles

Subscribe Now

<b>Subscribe now!</b>

To receive your exclusive print editions delivered to you directly


Online edition
Previous editions

Poll

Is deflation a major risk in OECD economies?

Yes
No
Don't know

OECD Insights Blog

NOTE: All signed articles in the OECD Observer express the opinions of the authors
and do not necessarily represent the official views of OECD member countries.

All rights reserved. OECD 2014