16/5/2011 00:00:00

Growth forecasts for Italy in 2011 and 2012 are half point “below the Eurozone average”. This is reported in the spring forecast of the EU Commission, indicating that Italian GDP is growing by 1.0% in 2011, and 1.3% in 2012. According to the European Commission, the risks for the perspectives of the Italian economy “seem a bit shifted to the downside.” This is because inflation could be higher than expected due to the effects of geopolitical tensions in North Africa on energy prices, with negative effects on private consumption. Moreover, a more sharply increase of the interest rates than shown by the financial markets, could adversely affect the investment decisions of firms. Exports continue to grow by 1% in 2011 and 1.3% in 2012, about half a percentage point below the Eurozone average. Italian exports still remain primarily dependent on the demand perspectives in the partner countries of the Eurozone. Their growth will be lower than that of global demand. The improvement in profitability of companies will have a positive effect on investment in equipment but the low level of utilization capacity in industry and the need for adjustments in the financial statements “will limit the room for new investment.” Furthermore, in 2011 the construction sector continue to decline. Given the moderate private consumption in the two-years period, the conditions of the labor market will improve only gradually and inflationary pressures make it difficult to increase disposable income. The recovery in employment in 2011 will increase from -0.7% to +0.4% in 2012 and +0.9% in 2013. Companies will reabsorb workers in layoffs before making new hires. The unemployment rate has increased only gradually in 2009-2010 and stabilized at around 8.5%. The youth unemployment rate increased by 6 points exceeding 28% in early 2011. The long-term unemployment as a share of total unemployment has increased by 4 percentage points to 48.5%. The unemployment rate this year will be 8.4% (as in 2010), 8.2% next year. The weakness of the labor market and the developments in productivity will leave “little room” for further wage increases at the business and sector level: thus, after remaining stable in 2010, unit labor costs will increase moderately, but this “should not be enough to allow Italy to regain competitiveness against the rest of the Eurozone. “

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