{
  "title": "Italy Needs Higher Productivity and More People Working",
  "publication": "IMF News, July 15, 2025",
  "sourceUrl": "https://www.imf.org/en/news/articles/2025/09/15/cf-italy-needs-higher-productivity-and-more-people-working",
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  "summary": "While the economy has been relatively resilient, the country must offset a declining working-age population and a shortage of highly skilled professionals",
  "publishDate": "2025-07-15",
  "sections": [
    {
      "heading": "Economic resilience and near-term outlook",
      "content": "- Italy’s economy remained relatively resilient despite global uncertainty.\n- Key contributors to resilience:\n  - Investment supported growth, notably through strong implementation of the National Recovery and Resilience Plan (NRRP).\n  - Labor market improvements, including more jobs with permanent contracts.\n  - Share of employed people as a percentage of the working-age population rose to a record high.\n  - Diverse export goods and destinations provide some protection.\n- Recent performance and projections:\n  - Growth was 0.7 percent last year.\n  - Projected growth is 0.5 percent this year.\n  - Projected growth is 0.8 percent in 2026 when most NRRP infrastructure investments are expected to be completed.\n- Fiscal outcome last year:\n  - Primary surplus of 0.4 percent of GDP."
    },
    {
      "heading": "Risks and structural constraints",
      "content": "- External and immediate risks:\n  - Trade uncertainty and new tariffs on exports to the United States; recent data indicate trade is being impacted.\n  - Intensification of regional conflicts that raise commodity prices; Italy depends on imported energy.\n  - Extreme weather risks harming agriculture and tourism.\n- Long-term structural constraints:\n  - Population aging and weak productivity.\n  - Working-age population is projected to decline by double digits between 2024 and 2050.\n  - Shortage of highly skilled professionals limiting innovation and productivity.\n  - Small innovative firms struggle to become large firms; constrained business dynamism and limited venture capital access."
    },
    {
      "heading": "Policy recommendations to boost labor supply and productivity",
      "content": "- Labor force participation and human capital:\n  - Boost women’s participation in the labor force (examples: increase childcare availability; remove tax disincentives for dependent spouses).\n  - Lift skill levels through education and on-the-job training.\n- Measures to support firm growth and innovation:\n  - Develop policies to help private sector produce and adopt innovation more quickly so promising companies can grow.\n  - Address constraints that prevent small firms from tapping venture capital and scaling up.\n- Structural and EU-level actions:\n  - Deepen the single market and the capital markets union to address fragmented European markets and increase effective market size.\n  - Support EU-wide initiatives on artificial intelligence and other frontier technologies.\n  - Pursue European labor mobility reforms to narrow the skills gap.\n- Estimated impact of reforms:\n  - A package that increases women’s participation, raises skill levels, and increases productivity could boost average annual growth by between 0.1 and 0.4 percentage points during 2025–2050."
    },
    {
      "heading": "Fiscal strategy and recommendations",
      "content": "- Recent fiscal strength and medium-term goals:\n  - Last year’s primary surplus: 0.4 percent of GDP.\n  - Public debt was around 135 percent of GDP last year.\n  - Government commitment shown in its medium-term fiscal-structural plan.\n- Rationale for faster consolidation:\n  - Projected interest rate on public debt will exceed economic growth, complicating debt reduction.\n  - Aging population will increase pressure for spending on pensions and healthcare.\n- Recommended fiscal target:\n  - Deliver somewhat more consolidation than planned this year and next—reaching a primary surplus of 3 percent of gross domestic product by 2027.\n- Suggested fiscal measures to soften growth impact and improve equity:\n  - Continue to improve tax compliance.\n  - Rationalize tax expenditures (for example, phasing out inefficient hiring subsidies).\n  - Eliminate the preferential flat-tax rate on income of self-employed people.\n  - Reduce public guarantees to strengthen resilience and reduce risks."
    },
    {
      "heading": "Institutional and implementation progress",
      "content": "- NRRP implementation is well underway with measures including:\n  - Judicial reforms to reduce court backlogs.\n  - Improvements to tax compliance.\n  - Investments enhancing the railway system and school infrastructure.\n\nInternational Monetary Fund\n\n---\n\n\n References\n\n- ITALY AND THE IMF\n- https://www.imf.org/en/News/country-focus\n- PRESS CENTER\n- IMF’s latest report\n- delved into\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2025/09/15/cf-italy-needs-higher-productivity-and-more-people-working"
    }
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    "[Markdown version](/en/news/articles/2025/09/15/cf-italy-needs-higher-productivity-and-more-people-working/index.md)",
    "[Structured JSON version](/en/news/articles/2025/09/15/cf-italy-needs-higher-productivity-and-more-people-working/index.json)",
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    "Published: July 15, 2025",
    "Italy’s economy remained relatively resilient despite global uncertainty.",
    "Key contributors to resilience:",
    "Recent performance and projections:",
    "Fiscal outcome last year:",
    "External and immediate risks:",
    "Long-term structural constraints:",
    "Labor force participation and human capital:",
    "Measures to support firm growth and innovation:",
    "Structural and EU-level actions:",
    "Estimated impact of reforms:",
    "Recent fiscal strength and medium-term goals:",
    "Rationale for faster consolidation:",
    "Recommended fiscal target:",
    "Suggested fiscal measures to soften growth impact and improve equity:",
    "NRRP implementation is well underway with measures including:",
    "[ITALY AND THE IMF](https://www.imf.org/en/countries/ita)",
    "[https://www.imf.org/en/News/country-focus](https://www.imf.org/en/News/country-focus)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[IMF’s latest report](https://www.imf.org/en/Publications/CR/Issues/2025/07/21/Italy-2025-Article-IV-Consultation-Press-Release-Staff-Report-and-Statement-by-the-568826)",
    "[delved into](https://www.imf.org/en/Publications/CR/Issues/2025/07/21/Italy-Selected-Issues-568829)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
  ],
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