The Organisation for Economic Co-operation and Development (OECD) has advised Italy to uphold the momentum with its economic reforms, which will ensure that it will grow at a much faster rate than is currently estimated.
According to the OECD, the reforms that prime minister Mario Monti’s government have been rolling out, which were long overdue, have already been decisive.
The international organisation said that improvements in regulation, the labour market, anti-corruption and civil justice, will help solidify the foundations needed for a “stronger, more competitive and inclusive Italy”.
With such sizeable changes, the OECD speculated that by 2022, Italy’s GDP could increase by as much as four per cent.
“This means adding some 0.4 percentage points to Italy’s growth every year for the next ten years, based on the reforms announced so far,” explained Angel Gurría, the OECD’s secretary-general, at the International Conference on Structural Reforms in Italy.
“This is not just about greater prosperity in the future, it is about creating jobs now and improving confidence about the future today. But to bear fruit, reforms need to be fully implemented. Italy must act fast: to boost competition, to foster innovation, to deliver high-quality education, to enhance social cohesion, to modernise public administration.”
The message comes at a very sensitive time in Italy, where labour productivity has been so low that it ranks as one of the weakest among OECD countries. With little growth, labour costs have escalated, impacting on the country’s ability to be competitive.
To combat this, the OECD has suggested Italy also needs to find solutions to increase productivity, keep wages in line with growth and reduce the tax burden on income.
“I trust the immense capacity of Italians to overcome challenges,” Mr Gurría said in conclusion.
“Some alleged words of Leonardo da Vinci say: ‘I love those who can smile in trouble, who can gather strength from distress, and grow brave by reflection’. This is what drives the Italian spirit, and I am sure that the reforms and policies by this government will make the most of this drive.”
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