Italy’s public debt for now remains sleeping during the turmoil of the euro zone’s crisis. Giulio Tremonti (Berlusconi’s finance minister) managed to keep the budget deficit to an impressive 4.6%, well below the 5% target. So far this has saved Italy from joining the euro zone’s PIGS (Portugal, Ireland, Greece and Spain. Incorrect figures showed faster than expected growth in 2010 but in reality, GDP shrunk by 5.2% in 2009 and a further 1.3% last year. However, the euro zone as a whole grew by 1.7% with a staggering 4% growth from Germany. The euro crisis has revealed the structural weakness of Italy’s economy. When euro-zone GDP falls, Italy’s falls by more and when it rises, Italy’s rises by less. Italy has too few large firms and doesn’t provide enough jobs for young workers with over a fifth of the country’s 15-29 year olds unemployed. The south of Italy is a heavy burden, as a 3% GDP increase in the north is met by a 2% decrease in the south therefore dragging on the average. The average youth unemployment in parts of the south of Italy is up to 40%. Italy must cooperate between north and south to produce a more stable growth and competitive economy for the future.
Edoardo Toso
