“Italy has the fifth highest tax wedge in the OECD and this does not encourage work, a reform is important”. The representatives of the OECD on the 2021 Economic Report on Italy said this in a videoconference hearing to the Senate Budget Committee. According to the experts of the international organization, “Italy should give targeted financial support until the recovery is underway and then it must invest in green infrastructure and reform justice”.
The OECD expects growth of 6% this year and 4.1% in 2022 and is confident that GDP will return to 2019 levels by mid-2022: “The short-term rebound is an important point but Italy cannot return to pre-covid growth levels because they were too low. ‘ However, what worries the OECD remains the fact that “Italy spends much more on pensions and debt services than other countries and this penalizes young people and future growth prospects”. Of course, “Italy is in an excellent position, but the PNRR imposes a demanding agenda from an administrative point of view”, underlining how important it is to reform the public administration and push the hiring of young people, even with flexible contracts.
However, there is no lack of downside risks: “There are collateral risks if the shortage of raw materials continues” said the OECD representatives, explaining that “rapid increases can reduce household consumption and have a negative impact on the improvement of ’employment because companies are unable to produce as much as they would like with respect to demand ”. The hope is that the situation will improve in the second half of next year.