Estimates from the Economic Survey of the Organization for Economic Cooperation and Development (OECD) indicate a recovery of the Italian economy from the effects of the Covid-19 pandemic, “with a consequent recovery of activity levels in 2019 during the first semester of 2022 “.
Estimates from the OECD
For 2021, Italy is estimated to grow by 5.9%, after the contraction of 8.9% in 2020. This was reported by the Organization which observes that “a significant fiscal support in 2021 will favor the recovery in the short term , with the acceleration of vaccination rates and the relaxation of restrictions ».
For the future “public investments, including those financed by Next Generation EU funds, combined with greater confidence and higher levels of demand, will support investment in the private sector”. For Italy, the objective to strive for is that of “stronger and more sustainable” growth over time.
“Public debt will rise to almost 160% of GDP in 2021” and at the same time “demographic aging will put public finances under pressure”. For this reason, the OECD has invited our government to “announce in advance a medium-term fiscal plan to be implemented once the recovery is consolidated, in order to reduce the ratio between public debt and GDP, taking into account the effects of demographic aging ».
With the gradual lifting of the multiple support measures introduced by the government, the number of bankruptcies is likely to increase and this increase will weigh on banks in an environment characterized by relatively low profits and still high non-performing loans compared to other OECD countries. The OECD underlines this, explaining however that “the banking system rests on more solid foundations than in the period of the sovereign debt crisis in 2012”.
According to the Organization, in fact, “the chances of successfully implementing structural reforms and public investment projects are now greater than in the past”.
The future of public administration
The Italian public administration “could become stronger and more effective, but at the moment it appears to lack personnel with the necessary skills”. “The acceleration of the retirement of public employees over the next decade – specifies the OECD – will make it possible to implement a renewal process, as long as the hiring process is more agile and anticipates the need for skills, and on condition that employees retiring publics can pass on their experience to new hires ».
“Italy should contain pension spending”
Interventions must also be kept in check as regards pension expenditure: Italy – according to OECD – should “contain spending by letting the early retirement scheme (Quota 100) and the so-called” Woman Option “expire in December 2021, and immediately re-establish the correlation between retirement age and life expectancy ».
“Citizenship income is not enough, few find employment”
In the economic study on Italy it is also specified that the introduction of citizenship income “has contributed to reducing the level of poverty of the poorest sections of the population” and although poverty levels have increased with the pandemic, “in 2020 the transfers public authorities have limited the decrease in household disposable income to 2.6% in real terms ».
The digitization process must be supported and speeded up
To accelerate the recovery, it is also necessary to focus on digital, where Italy still appears to be in difficulty. “Our country boasts a low level of digital literacy and adoption of digital services compared to the rest of the OECD countries.” Only 44% of people between 16 and 74 have basic digital skills, compared to the EU average of 57%, the study reads. “This is why it is necessary to support a more rapid spread of fast broadband, which is currently very limited”.
“Italy’s National Recovery and Resilience Plan is activating stronger, greener, fairer and more digitized growth that will benefit all Italians with better opportunities to move forward.” However, the plan needs to be fully implemented and supplemented with reforms to support further growth, even with more investments in green infrastructure.
The statements of the Minister of the Economy Daniele Franco
“We aim for post-Covid growth that is higher than the average of the pre-Covid period”. Economy Minister Franco said this during the press conference to present the OECD economic study.
The Draghi government has drawn up a “challenging reform agenda from both an economic and political point of view, with interventions ranging from taxation to competitiveness and labor policies as well as sectoral reforms”.
“We are reselling our official macro forecasts” The minister said, commenting on the OECD estimates which revised upwards the GDP growth estimates (+ 5.9% in 2021) which are “much above 4.5% which we indicated in the spring. The Government will update the estimates at the end of the month ».
Between the end of 2021 and the beginning of next year, “we will have a major change in retirement requirements, and the 100 quota will expire. We are aware that some economic sectors are facing difficulties, these are aspects to be taken into consideration – the minister specified – but I am confident that the executive will find a balanced solution in the next budget law ».
The tax reform will be central to the revision of the taxation of personal and earned income. “We are aware of the obstacles and the commitment it takes to overcome them, but we are committed to doing everything necessary to release the potential for growth and overcome stagnation.” “The Italian public debt is fully sustainable” but the fiscal policy of the Draghi government “will be increasingly prudent” and “in the medium term after the end of the crisis we are aiming for the pre-covid target of primary surplus” concluded the minister.