Improving vaccination rollout has allowed a gradual easing of activity restrictions
The high share of severely restricted sectors amplified economic contraction
COVID impact has been broad – but the most vulnerable have suffered more
Italy has relied heavily on short-time work schemes and made provision for generous loan facilities
Exports by main destinations and main goods
Confidence has recovered, and investment is expected to lead the rebound
Swift policy responses have been a vital lifeline for access to finance given low cash holdings
Vulnerabilities remain in the banking sector
Non performing and bad loans have been progressively reduced
Public debt levels have risen sharply and will remain elevated
Spending on pensions is set to rise from already high levels – even with reforms
Older Italians are relatively well off compared to counterparts in Europe
Putting public debt on a downward path requires additional structural reforms
Per capita income has stagnated
Sluggish investment and productivity have weighed on growth
Investment dominates spending plans
There is room to improve utilisation of EU investment funds
Investment has recovered slowly from the global financial crisis and lags peers
Investments rose fastest in manufacturing sectors and intellectual property assets
R&D spending is particularly low by the government and higher education institutions
Non-financial corporates have reduced leverage but are still vulnerable
The generosity of ACE reduces the debt bias
Italy has progressed in reducing carbon emissions
Transport, electricity and domestic heating are the main sources of greenhouse gas emissions
Carbon pricing is not yet widely applied and exposure to particulate emissions remains high
Uncertainty about regulations and taxes is a major obstacle to green investment
Regulations can be better designed to achieve objectives
Figure 1.28. Italy’s productivity growth has lagged its peers for the last two decades
A recovery in manufacturing productivity, but services sector productivity lags
Firms’ entry and exit rates lag other countries
Product market regulation in Italy’s services sector lags other areas
Professional services restrictions are very high
Access to high-speed broadband is low
There is scope to increase the use of government e-services
Low recovery rates can stymie firm creation and raise the costs of recessions
Italy’s justice system in practice reduces the efficacy of its property rights framework
Perceptions of corruption are still high compared to other OECD countries
Italy has been effective in fighting money laundering
Access to employment is deeply unequal and unemployment is persistent
Workers benefiting from Italy’s recent reforms now face income tax wedges near the EU average
Spending on ALMPs has risen, but high unemployment and skills gaps require more
Firms are not providing their employees enough digital training
Italy’s tax mix has low reliance on VAT and a higher reliance on social security contributions than peer countries
Inheritance tax thresholds are low compared to OECD peers and average bequests
The marginal effective rates of property