Italy: Policy tightening

A recovery in 2006 signals an end to four and a half years of near stagnation. The main driving forces have been strong export market growth, easy credit conditions, reform-led employment growth and improving confidence. Growth is likely to slow in 2007 partly due to policy tightening, but rebound by 2008.
The 2007 fiscal consolidation rests, for the most part on projected revenue hikes, which might increase work and investment disincentives. Containment of spending pressure is therefore needed, notably in the pension, public employment, local authorities and health areas as indicated in the government’s own medium term plan. To keep inflation under control, it will be important to fully implement announced product market reforms. More decentralised wage setting could further help to recoup past competitiveness losses.
Population (000s), 200558 135
Area (000 sq km)301
CurrencyEuro
GDP (Billion USD), 20051 666.4
Life expectancy at birth (Women, Men), 2003 82.5, 76.8
Total labour force (000s), 200424 451
Government typeRepublic
Indicators% change unless otherwise indicated
200620072008
GDP growth1.81.41.6
Household savings ratio10.29.510.0
Consumer price index2.21.92.0
Short-term interest rate (%)3.13.84.0
Unemployment rate (%)7.16.86.5
General government financial balance
(% GDP)
-4.8-3.2-3.3
Current account balance (% GDP)-2.2-2.2-2.6
Source: OECD©OECD Observer No. 258/259, December 2006


Economic data

GDP growth: -1.8% Q1 2020/Q4 2019
Consumer price inflation: 0.9% Apr 2020 annual
Trade (G20): -4.3% exp, -3.9% imp, Q1 2020/Q4 2019
Unemployment: 8.4% Apr 2020
Last update: 9 July 2020

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