Italy: 2020 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Italy

IMF Staff Country Reports, March 20, 2020

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Canonical URL: Italy: 2020 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Italy

Reflections of discussions with the Italian authorities in January 2020; based on information available as of January 28, 2020.
Prepared prior to the outbreak of COVID-19 in Italy; therefore does not cover the outbreak or the related policy response.
The outbreak has greatly amplified uncertainty and downside risks around the outlook; IMF staff is closely monitoring the health crisis and assessing its impact and the related policy response in Italy and globally.
Overarching challenges identified: raise growth and enhance resilience.

The IMF staff projects growth in Italy to be the lowest in the European Union over the next five years.
High public debt remains a key source of vulnerability.
Substantial progress has been made in strengthening bank balance sheets, but important weaknesses remain.
To durably raise growth and reduce vulnerabilities, Italy needs:
- faster potential growth; and
- medium-term fiscal consolidation.

Banking and Financial institutions: bank balance sheet strengthening noted, remaining weaknesses highlighted.
Public finances: high public debt emphasized as a major vulnerability; medium-term fiscal consolidation recommended.
Macroeconomic performance: Italy’s projected growth trajectory relative to EU peers flagged as weakest over the next five years.
Labor and income: subjects include Income, Labor, Labor costs, Wage bargaining.
Nonperforming loans: identified among banking sector concerns.
National accounts and GDP ratio considerations referenced.

Source: Italy: 2020 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Italy (IMF, March 20, 2020).