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21 November 2018The OECD cuts the estimates on the Italian GDP and expects a growing deficit in the public accounts. "The recovery has lost momentum and the increase in uncertainty and interest rates will reduce the propensity of families and businesses to consumption and investments, counterbalancing the expansive effects of the public budget on the activity". These are the estimates provided for in the Organization's half-yearly economic Outlook, according to which the GDP increase for 2018 is revised to 1% (from 1.2% indicated in September and 1.4% in May) and + 0.9% for both 2019 (previously + 1.1%), and 2020.Italian debt will remain at 130%
Given the low growth, the rise in interest costs and a higher deficit, "the debt level will cease to fall and will remain at around 130% of GDP". The Economic Outlook estimates a debt of 129.9% both in 2019 and in 2020. "The fiscal policy - the report explains - will be expansive in 2019 expanding the deficit to 2.5% of GDP and 2.8% in 2020. The public debt, which has gradually fallen with respect to GDP, will instead stabilize at a high level ".
Reduced age pensions will aggravate inequalities
The reduction of the retirement age "will aggravate the inequalities between generations by increasing the already high level of social security expenditure" and "will reduce long-term growth by reducing the working-age population": this is what is read in the tab dedicated to Italy regarding quota 100.
Income from Citizenship has little benefit to growth
The Italian maneuver "rightly has the objective of helping the poor, but given its composition, the benefits on growth will probably be modest, especially in the medium term": this is what the OECD states in the chapter of the Economic Outlook 2018 dedicated to Italy. The citizenship income currently promoted by the government, it is explained, "considerably strengthens the anti-poverty programs, but to be effective and contain costs, the government must accelerate reforms aimed at improving job search programs and training, as well as social inclusion policies ". In any case, according to the OECD, "building on the work already done by numerous municipalities within the framework of the new income inclusion plan that entered into force at the beginning of 2018 would give better and faster results".
Consumption and investments are decreasing
"Private consumption - the OECD report states - will be reduced, since the lower growth in employment and the rise in inflation would reduce gains in terms of disposable income and offset the positive effects of expansionary policies". Furthermore, according to the OECD, "business investment will slow down as domestic demand and foreign demand weaken. At current levels of demand weakness the current account surplus will remain at around 2.5% of GDP".
Prudent budgetary policies and reforms are needed
In Italy "a prudent budget policy and structural reforms are needed to relaunch growth and cope with the deep regional social divisions". This is the appeal launched by the OECD in the Economic Outlook 2018. "Economic and social reforms and a prudent fiscal policy - the economists of the international organization reiterate - must continue if Italy wants to strengthen social cohesion and boost growth ". According to the OECD, "without a sustainable budget policy, the space for the public sector to benefit and aid the poor will inevitably be reduced".