OECD ECONOMIC SURVEY OF
ITALY
Restoring strong and sustainable growth Rome 22 January 2023 oe.cd/italy @OECDeconomy @OECD
The economy has been remarkably resilient compared with other large euro area countries Real GDP Index, 2019Q4=100 105 100 95 90 85
Italy
France
Germany
Spain
80 75
2020
Source: OECD Economic Outlook 114 database.
2021
2022
2023
Exports have performed strongly Real exports
Index, 2019Q4=100 130 Italy
120
France
Germany
Spain
110 100 90 80 70
2015
2016
Source: OECD Economic Outlook 114 database.
2017
2018
2019
2020
2021
2022
The health of the banking sector has improved but risks are rising Net non-performing loans Per cent of total gross loans
12 Italy
Euro area
OECD
10 8 6 4 2 0
2010
2011
2012
2013
2014
2015
Source: International Monetary Fund; European Central Bank.
2016
2017
2018
2019
2020
2021
2022
Housing investment has turned Real Investment Index, 2019Q4 = 100 180 Business
Housing
160 140 120 100 80 60
2020
Source: OECD Economic Outlook 114 database.
2021
2022
2023
Growth is projected to pick up only slowly 2022
2023
2024
2025
Real GDP growth (%)
3.9
0.7
0.7
1.2
Consumer price index (%)
8.7
5.9
2.6
2.3
Government budget balance (% of GDP)
-8.0
-5.4
-4.2
-3.6
Public debt (% of GDP)
141.6
141.4
141.4
140.5
Source: OECD.
Strengthening public finances
Public spending pressures are set to rise Public spending on ageing-related costs and interest payments % of GDP 40
Ageing costs
Interest spending
35 30 25 20 15 10
2020
2023
2025
Note: Ageing costs include old-age and survivors’ pensions, health and long-term care. Source: European Commission (2021); OECD Long-Term Baseline database.
2030
2035
2040
Reforms are required to ensure fiscal sustainability Public debt % of GDP
200 180 160 140 120 100 80 60
Existing tax and spending policies Proposed EU fiscal rules (primary surplus of 3% of GDP by 2031) Proposed EU fiscal rules + structural reforms 2025
2030
2035
2040
2045
2050
2055
2060
Note: The “Existing tax and spending policies” scenario assumes that the structural primary fiscal balance before accounting for net ageing-related costs remains constant at 2025 levels and the headline balance declines with rising net ageing costs and interest expenditure. Net ageing costs are defined as changes in expenditure on old-age pension, health and long-term care minus changes in expenditure on education. The “Proposed EU fiscal rules” scenario is based on a stylised version of the Commission’s reform proposals. It assumes that (a) the primary balance is raised by 0.5% GDP when the headline budget deficit exceeds 3% of GDP; (b) public debt as a share of GDP is lower in 2031 than in 2024; and (c) public debt as share of GDP is on a declining path in 2031. The “Proposed EU fiscal rules + structural reforms scenario” additionally assumes higher GDP growth from the implementation of the ambitious package of structural reforms proposed in the 2024 OECD Economic Survey of Italy. Source: OECD calculations based on OECD Economic Outlook database and OECD Long-Term Model.
Budget balance needs to improve over 2025-31 to meet new EU fiscal rules Required change in the underlying primary budget balance relative to 2024 % of GDP 4,5 4,0 3,5 3,0 2,5 2,0 1,5 1,0 0,5 0,0 Source: OECD
2024
2025
2026
2027
2028
2029
2030
2031
A solidarity contribution from high pensions would help contain spending pressures Public expenditure General government, % of GDP, 2021
18
Italy
16
Euro area
14 12 10 8 6 4 2 0
Interest payments
Education
Source: OECD National Accounts database; OECD Analytical database.
Other social
Health
Pensions
Strengthening tax compliance would raise revenues VAT compliance gap
Source: European Commission, VAT Gap Report 2023.
GRC
LTU
ITA
SVK
LVA
CZE
BEL
IRL
EU
DNK
FRA
HUN
SWE
PRT
POL
AUT
DEU
SVN
LUX
EST
ESP
FIN
20 18 16 14 12 10 8 6 4 2 0 -2
NLD
Difference between theoretical and actually collected revenue, %, 2021
Strengthening growth and employment
Reforms are needed to raise productivity Contributions to real GDP growth %, 2010-23 6 5
Labour productivity
Employment
4 3 2 1 0
-2
GRC ITA JPN FIN PRT ESP FRA AUT DEU BEL GBR NLD NOR CZE MEX CHE CAN DNK OECD SVN SWE LUX SVK USA AUS HUN LVA KOR CHL EST NZL ISL LTU COL POL CRI ISR TUR
-1
Source: OECD Economic Outlook 114 database.
The ongoing civil justice reform needs to be thoroughly implemented Expected time for a pending case to be resolved (Disposition Time) Number of days, 2021
1800 1600 1400 1200 1000 800 600 400 200 0
Note: Disposition Time (DT) is the calculated time necessary for a pending case to be resolved, considering the current pace of work. It is reached by dividing the number of pending cases at the end of a particular period by the number of resolved cases within that period, multiplied by 365. More pending than resolved cases will lead to a DT higher than 365 days (one year) and vice versa. Source: European Commission for the Efficiency of Justice.
Pro-competition reforms are needed in services Product market regulation indicators, professional services 0-6 in ascending order of restrictiveness, 2018 4,0 3,5 3,0 2,5 2,0 1,5 1,0
0,0
CHL FIN AUS GBR CHE SWE ESP NLD MEX NZE DNK NOR LTU EST IRL COL ISR OECD POL USA CRI LVA JPN EA SVN GRC ISL PRT HUN CZE DEU FRA LUX ITA AUT BEL SVK CAN TUR KOR
0,5
Note: The preliminary 2023 Product Market Regulation data suggest that regulation of professional services in Italy remains among the most restrictive in the OECD. Source: OECD 2018 PMR database.
Expanding technical tertiary education would improve job prospects of young people Young people not in education, employment or training (NEET) % of 15-29 age group, 2021
35 30 25 20 15 10
0
NLD LUX NOR ISL SVN DEU AUS DNK BEL CHE AUT IRL GBR SWE CZE FIN EST NZL HUN CAN POL PRT LTU SVK OECD LVA FRA USA ISR ESP MEX GRC CRI ITA COL TUR
5
Source: OECD Education at a Glance database.
Expanding early childhood education would raise female labour market participation Female labour market participation rate % 70
Italy
OECD
65 60 55 50 45 40
2000
2005
Source: OECD Annual Labour Force Statistics database.
2010
2015
2020
Achieving the climate transition
Significant emissions reductions are needed to meet 2030 objectives Economy-wide greenhouse gas emissions Index, 1990=100 120 110 100 90 80 70 Actual
60
Path needed to reach goal
50 40
2016-2021 trend trend) Linear (2016-2021 1990
1995
Source: OECD Emissions Database.
2000
2005
2010
2015
2020
2025
2030
Effective emission taxes could be raised where they are low Effective carbon rates EUR per tonne of CO2, 2021 250 200 150 100 50 0
Road transport
Transport, off road
Source: OECD Effective Carbon Rates Database.
Industry
Buildings
Electricity
Authorisation procedures for renewable energy plants should be streamlined Installation of renewable energy capacity Gigawatts 7 6
Annual target
5 4 3 2 1 0
2021
2022
Note : Annual target of new renewable energy installations according to the National Energy and Climate Plan. Source: : OECD calculations.
2023
Policies to support electrical vehicle adoption need to be strengthened Share of electric vehicles in new car registrations %, 2022 100 Battery electric cars
Plug-in electric cars (hybrid)
80 60 40
Source: European Environment Agency (EEA), European Commission - Directorate-General for Climate Action (DG CLIMA).
NOR
SWE
ISL
FIN
DNK
NLD
DEU
BEL
LUX
CHE
EU
IRL
AUT
PRT
FRA
ESP
ITA
HUN
LVA
LTU
GRC
SVN
EST
POL
CZE
0
SVK
20
Cost-efficient support schemes for the decarbonisation of buildings are needed Emission intensity in the residential sector Tonnes of CO2 per dwelling, 2021 3
2
1
0
Spain
Source: IEA Energy End-uses and Efficiency Indicators.
Italy
EU
OECD
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