OECD Report: Italy GDP + 5.9%, return to 2019 levels in 2022

2021-09-06T13:35:36.538Z

"The economy is expected to recover to 2019 levels by the first half of 2022", after growth for this year estimated at 5.9%. "Public debt will rise to almost 160% of GDP in 2021". This is what the OECD predicts in the Economic Survey on Italy, inviting us to "continue to provide increasingly targeted fiscal support until the recovery is consolidated in the economic and employment sectors". The OECD also hopes for "a medium-term fiscal plan to be implemented once the recovery is consolidated", to "reduce the ratio of public debt to GDP". The Italian economy, writes the OECD in the document dedicated to our country, "is recovering from the crisis induced by the Covid-19 pandemic". "The generous support of the government has mitigated job losses and adversity, and also preserved production capacity ", continues the international body based in Paris, adding that" loan guarantees and debt repayment moratoriums they supported corporate liquidity and limited bankruptcies. Part-time work schemes and a ban on dismissal have been complemented by income support for those who do not benefit from existing safety nets, along with postponing tax payment dates. School attendance and educational outcomes have worsened for the most disadvantaged individuals; on the other hand, the social isolation due to the lockdown was associated with an increase in domestic violence ".OECD, "Significant fiscal support in 2021 will foster recovery in the short term, by accelerating vaccination rates and easing restrictions. Huge public investments, including those financed by Next Generation EU funds, together with greater confidence and higher levels of demand will support investment in the private sector. " And "however, compared to other large economies - warns the Parisian body - in Italy the recovery will continue to delay, with a GDP that will recover the levels of 2019 only in the first half of 2022. An increase in consumption is also expected when households they will be able to use part of their savings and employment levels will increase. " The OECD therefore defines "necessary"public finance reforms "to encourage faster growth and a quantitative and qualitative increase in jobs". "Despite relatively high public spending, spending that can best support growth and well-being is modest and has also declined." "Next Generation EU grant funds - specifies the OECD - are around 13.5% of GDP in 2020. The historic slowness of the absorption rates of EU funds derives from some factors that hinder planning, approval and program implementation. Procurement is slow, competition is limited and capabilities vary greatly. " The OECD therefore recommends "improving the composition of public spending in order to promote growth and job creation.Improve coordination between agencies in charge of implementing public investment projects in order to increase disbursement levels. Compact the procedures of public contracts currently entrusted to multiple small-sized agencies and concentrate them in a smaller number of entities with greater capacity ". Cormann: Italy's objective is sustainable growth Italy is moving towards growth" of about 6% this' year "after the strong recession of 2020, now" the goal is to make growth stronger and more sustainable "on a structural basis. This was stated by Mathis Cormann, Secretary General of the OECD, presenting the Economic Survey on Italy together with the Minister of Economy Daniele Franco.Cormann focused on the need for greater competition for productivity and a reform of the Public Administration. "Income has attenuated poverty but few find employment" The introduction of the citizen's income "has helped to reduce the level of poverty of the poorest segments of the population "and although poverty levels have increased with the pandemic," in 2020 public transfers limited the decrease in household disposable income to 2.6% in real terms ", writes the OECD, recalling that, compared to the recommendation to strengthen the social assistance services at the municipal level and establish a collaboration with the public employment services, "the number of beneficiaries who have actually found employment is scarce". OECD to Italy:contain pension expenditure, via quota 100 "Contain pension expenditure by letting the early retirement scheme (" Quota100 ") and the so-called" Woman Option "expire in December 2021, and immediately re-establish the correlation between retirement age and hope": this is one of the recommendations addressed by the OECD to Italy in the document 'economic studies 2021' published today. "The pressures on spending linked to demographic aging and interest are high and destined to increase in the long term", warns the international body based in Paris, recalling that "the government has committed itself to restoring pre-existing debt levels. Covid ". The OECD to Italy: "Pushing investments and productivity"Increase investment and productivity: this is the appeal to Italy by the OECD, according to which "government incentives, including the recent temporary increase in subsidies relating to corporate equity, only partially offset the regulatory obstacles to the increase in investments ". "The productivity of the service sector - warned the organization in the document 'Economic Studies of the OECD. Italy 2021' - is lower than that of the manufacturing sector and the levels of growth of companies are lower than those of other OECD countries. regulations are often anti-competitive ". The Parisian body therefore recommends that our country "reduce the regulatory barriers to entry for professional services,also replacing licensing systems with less distortive certification schemes ", but also" introducing a national productivity committee that identifies and communicates the costs and benefits of reforms and builds a national consensus. Make sure that the tax relief for companies' equity is sufficiently predictable and generous to reduce the distortion between debt and equity. "In Italy, the Parisian body emphasizes," investment rates are among the lowest in the area of the OECD, held back by uncertainty, the high need for financial leverage and the lack of access to capital account financing ". For the OECD,"higher public investments financed by Next Generation EU and generous tax incentives can attract private investment, provided that the levels of leverage do not reduce the risk-taking by companies. "In addition, the" qualitative improvement of public administration and initiatives aimed at decreasing the perceived degree of corruption would reduce the need for tax incentives and would also support investments ". But that's not all. The OECD underlines that" a faster spread of broadband would favor the digitization of the private sector and greater use of growing range of public services available online "."The stagnant productivity growth over the past two decades has resulted from the lagging productivity of the service sector. The productivity of the manufacturing sector has grown thanks to the realization of greater investments and the exit from the scene of less productive companies. Conversely, regulatory barriers, including those that run counter to recommendations issued by the competition authority, place high barriers to entry into the retail and professional services sector. This in turn depresses competition and innovation ", concludes the OECD. The digitalization node" Italy boasts a poor level of digital literacy and adoption of digital services compared to the rest of the OECD countries ", underlines the 'OECD in the economic study on Italy explaining that "only 44% of people between 16 and 74 have basic digital skills, compared to the EU average of 57%". This is why it is necessary "to support a more rapid spread of fast broadband, which is currently very limited" because this "could accelerate the digitization process". According to the OECD "the entire public administration appears to lack personnel with the necessary skills. The acceleration of the retirement of civil servants over the next decade will allow for a renewal process, provided that the recruitment process is more agile and anticipate skill needs,and on condition that public employees who retire can pass on their experience to new hires "." Having more solid skills - continues the international body based in Paris - will also be essential to further exploit the advantages of digitalisation ".