This Survey is published on the responsibility of the Economic and Development Review Committee of the OECD, which is charged with the examination of the economic situation of member countries. The economic situation and policies of Italy were reviewed by the Committee on 6 July 2021. The draft report was then revised in the light of the discussions and given final approval as the agreed report of the whole Committee on 22 July 2021. The Secretariat’s draft report was prepared for the Committee by Catherine Macleod (Senior Economist) and Tim Bulman (Senior Economist), with contributions from Ruggero Doino, under the supervision of Isabelle Joumard (Head of Division). Statistical research assistance was provided by Béatrice Guérard and editorial assistance by Heloise Wickramanayake and Gemma Martinez. The previous Survey of Italy was issued in April 2019. Information about the latest as well as previous Surveys and more information about how Surveys are prepared is available at www.oecd.org/eco/surveys

The pandemic’s early onset and high fatality rates necessitated intensive lockdowns, resulting in a severe contraction in the Italian economy (). Regionalised lockdowns and new modes of working have reduced the impact of restrictions on activity since then. The vaccine campaign, which first prioritised the most vulnerable to reduce pressure on hospitals, has been extended to all over 12.

The COVID-19 pandemic hit Italy hard, triggering the deepest recession since the Second World War. The government has prioritised bringing the health situation under control, and generously supporting livelihoods and firms. The economy is recovering as the vaccination campaign has expanded. Growth has broadened from manufacturing and investment to include services and consumption. The banking and non-financial corporate sectors are stronger than the start of the sovereign debt crisis. Together with the efforts to preserve economic capacity, this has helped the economy rebound.

Raising the effectiveness of Italy’s public sector is more urgent than ever. It will be key to revive investment and productivity and improve access to quality public services for the most vulnerable. The quality of public goods and services is variable, weakening Italy’s resilience to shocks like the COVID-19 crisis and the ability to secure a more sustained and inclusive recovery. Excessive regulations and their onerous enforcement add to businesses’ operating costs. Trust in public institutions and public service delivery is one of the lowest across OECD countries. In the coming years Italy will have a unique opportunity to improve the effectiveness of its public sector, through the Recovery and Resilience Plan, the renewal of the public sector workforce, and the potential of technological innovations. This chapter proposes options to strengthen public sector effectiveness by looking at what interventions the public sector makes in the economy, how the public sector mobilises its workforce, procures goods and services, and leverages the benefits of digitalisation, and who acts across levels of government and between the public and private sector. It concludes that recruiting and developing the necessary skills in the workforce, monitoring performance, as well as encouraging coordination will be key to better budget allocations, regulatory environment, and delivering quality public goods and services.