Share

IMF calls for faster Italy reform

Rome - Italy's recession-bound economy should begin to recover from the end of this year but its growth outlook remains weak and Enrico Letta's government must accelerate its reform efforts, the International Monetary Fund said on Thursday.

At the end of annual consultations with Italy, the IMF said the eurozone's third largest economy would contract by 1.8% this year, worse than its previous projection of a 1.5% fall in output.

Next year will see growth of 0.7%, the Fund said in its concluding statement, up from its previous forecast of 0.5%, but it warned that the risks to its outlook are tilted to the downside and market sentiment remains fragile.

Italy's reform efforts need to be complemented at the European level, the Fund said, urging direct asset purchases by the European Central Bank and more long-term cheap loans "of considerable tenor" to euro zone banks.

Italy is mired in its longest post-war recession, with gross domestic product shrinking for seven consecutive quarters since the middle of 2011 and unemployment at a record high above 12 percent.

The IMF said it expected the recession to end towards the end of this year, supported by exports.

Recent data has been mixed, with some signs of revival in the manufacturing sector but a persistent slump in construction, retail and services, as domestic demand remains extremely weak.

"Accelerating the momentum for reform will be essential to jumpstart growth and create jobs," the IMF said.

"Europe will also need to play its part with actions to address financial fragmentation and strengthen further the currency union," it added.

Italy has been euro zone's most sluggish economy for more than a decade. After years of stagnation and recession its gross domestic product is lower now, in inflation-adjusted terms, than it was at the end of 2001.

"Italy's growth prospects over the medium term will strengthen only with the implementation of comprehensive reforms," the IMF said.

It said reforms adopted by Italy in recent years did not go far enough and called for greater deregulation of the service sector and the labour market and reform of a "lengthy and inefficient" justice system.

It urged a single, more flexible labour contract for new workers and said Italy should accelerate its stalled privatisation programme.

Italian authorities must also closely monitor Banca Monte dei Paschi di Siena's restructuring plan and be ready to act if Italy's third-largest lender misses its financial targets, the Fund said.


We live in a world where facts and fiction get blurred
Who we choose to trust can have a profound impact on our lives. Join thousands of devoted South Africans who look to News24 to bring them news they can trust every day. As we celebrate 25 years, become a News24 subscriber as we strive to keep you informed, inspired and empowered.
Join News24 today
heading
description
username
Show Comments ()
Rand - Dollar
19.00
-0.5%
Rand - Pound
24.02
-0.5%
Rand - Euro
20.51
-0.2%
Rand - Aus dollar
12.35
-0.0%
Rand - Yen
0.13
-0.6%
Platinum
900.15
+0.4%
Palladium
1,000.00
-0.2%
Gold
2,210.45
+0.7%
Silver
24.60
-0.2%
Brent Crude
86.09
-0.2%
Top 40
68,142
+0.7%
All Share
74,329
+0.6%
Resource 10
56,957
+2.3%
Industrial 25
103,635
+0.4%
Financial 15
16,485
-0.2%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Editorial feedback and complaints

Contact the public editor with feedback for our journalists, complaints, queries or suggestions about articles on News24.

LEARN MORE
Government tenders

Find public sector tender opportunities in South Africa here.

Government tenders
This portal provides access to information on all tenders made by all public sector organisations in all spheres of government.
Browse tenders