After the Crisis: Assessing the Damage in Italy
IMF Working Papers, November 1, 2010
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Bibliographic details
- Authors: Silvia Sgherri, Hanan Morsy
- Published: November 1, 2010
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781455209446.001
Summary findings
- Italy experienced an unsatisfactory productivity performance and dismal growth over the last 15 years.
- The global financial crisis exacerbated long-standing structural weaknesses, taking a heavy toll on Italy’s economy.
- With output back to its end-2001 level, Italy’s output losses associated with the crisis have been, thus far, about 132 billion of 2000 euro (around 10 percent of precrisis 1998 - 2004 real GDP).
- About three quarters of these losses are estimated to be due to a shortfall in potential output.
Mechanisms and timing of the damage
- Short-run: the decline in output is mainly accounted for by a collapse in productivity.
- Medium-term: employment and capital are also likely to be affected.
- Longer-term implications: adverse effects on potential growth and the fiscal outlook due to persistent losses in potential output and capital accumulation.
Projections and outlook
- Potential output is not expected to rebound to its precrisis trend over the medium term.
- Growth is projected to rebound to its precrisis trend within the next two years.
Key themes and topics covered
- Capital productivity
- Labor
- Output gap
- Potential output
- Total factor productivity
After the Crisis: Assessing the Damage in Italy, IMF Working Paper No. 2010/244