Italy: 2018 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Italy

IMF Staff Country Reports, February 6, 2019

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Italy has been struggling with low economic growth and poor social outcomes.
Structural weaknesses have been at the core of this economic underperformance.
Growth is projected to slow further, and the risk of recession has risen.
The extent to which risks materialize depends largely on Italy’s policies.
The authorities felt strongly that a fiscal stimulus is needed to promote economic growth and improve social outcomes.
The authorities are also seeking to reduce temporary employment and support job search.
Faster potential growth is identified as the only durable way for Italy to improve outcomes and enhance resilience.
By facilitating re-alignment of wages with productivity at the firm and regional levels, Italy’s high structural unemployment would fall, as would the continued heavy resort to temporary employment.

Growth is projected to slow further (exact projection figures not provided on this page).
The risk of recession has risen; realization of risks depends largely on policy choices.

Implement a package of structural reforms.
Undertake a credible fiscal consolidation based on growth-friendly and inclusive measures.
Strengthen bank balance sheets.
Advance reforms that facilitate re-alignment of wages with productivity at the firm and regional levels.
Reduce temporary employment and support job search through targeted labor-market measures.

Subject: Banking, Expenditure, Financial crises, Fiscal policy, Fiscal stimulus, Income, Labor, National accounts, Public debt, Public investment spending
Keywords: consultation discussion, CR, current ratio, deficit, deficit procedure, Fiscal stimulus, GDP, Global, IMF's transparency policy, Income, ISCR, liability positions vis-à-vis nonresident, output gap, potential GDP, Public investment spending, share capital increase