OECD: “Italy’s GDP at 5.9% in 2021”

For 2021, the OECD estimates a growth of 5.9% for Italy, after “the contraction of 8.9% in 2020, one of the most significant recorded among the countries” in the area. The Organization reports that “a significant fiscal support in 2021 will favor the recovery in the short term, with the acceleration of vaccination rates and the relaxation of restrictions”. For the future “larger 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”. However, adds the OECD, “compared to three major economies, the recovery in Italy will continue to lag behind, with GDP that will recover the levels of 2019 only in the first half of 2022”. The OECD warns, however, that “withdrawing support for individuals and businesses too prematurely would generate more bankruptcies, less employment and greater poverty”. Hence the invitation to “continue to provide increasingly targeted fiscal support until the recovery is consolidated in the economic and employment sectors”. report, “we have entered the challenging phase of implementation” of the Recovery and Resilience Plan drawn up for the Next Generation Eu and “Many of the OECD recommendations share the spirit” with which the Italian government drafted the plan.
CITIZENSHIP INCOME The launch of citizenship income “has helped to reduce the level of poverty of the poorest sections of the population”, containing the impact of the pandemic crisis on incomes, but a better connection with the labor market is needed given that “the number of beneficiaries who in fact found employment is scarce “and” the authorities attribute this result to the distance between the beneficiaries and the relative labor markets “. The invitation is to “reduce and thin out citizenship income to encourage beneficiaries to seek work in the formal economy”, but also to “introduce a subsidy for low-income workers”. JUSTICE Italy should “increase the resources allocated to the courts to better manage backlogs and enhance the speed and efficiency of civil judicial procedures “all the more so since” they risk being overwhelmed by the amount of work with the gradual economic recovery from the crisis “. According to the OECD, therefore, it is necessary to “implement the law for the reform of civil justice”. PUBLIC ADMINISTRATION The Italian public administration “could become stronger and more effective” even if at the moment “it 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 hiring process is more agile and anticipates the need for skills, and provided that public employees who will retire can Passing on their experience to new hires “. For the Organization”, having stronger skills will also be essential to further exploit the benefits of digitalisation. Regulatory requirements and the threat of judicial sanctions lead decision makers to take defensive positions rather than favor proactively providing services “. On the meritocracy front then, according to the OECD, “the effectiveness of public employees could increase if there was a system of better recognition of performance”. BANKS Although in Italy “the resilience of the banking sector has improved, according to OECD standards. Non-performing loans remain high “. “The major post-Covid defaults increase the risks to which bank balance sheets are exposed,” they write in the report. For the OECD, a “well-developed market for non-performing loans can play a key role in the redistribution of credit in the post-pandemic recovery phase. The call is also to” introduce market standards for the valuation of potentially bad loans and continue to encourage banks to sell non-performing exposures through rigorous supervision and guarantees, and to incentivize securitization. ” Finally, it is necessary to “strengthen the rapid alert system with digitized procedures to reduce the workload in the medium term and encourage the use of out-of-court settlement procedures, including through financial incentives”.