“Delays in the implementation of the recovery and resilience plan could reduce Italy’s GDP growth”: This is the warning of the OECD in the Economic Outlook 2023.
Rather, according to the Organization for Economic Co-operation and Development, “the swift implementation of structural reforms and public investment plans in the PNRR will be crucial to sustain activity in the short term and also to lay the foundation for sustainable growth in the medium term.” as “an added benefit of putting further downward pressure on the debt ratio.”
For Italy, growth is noted, albeit modest, with a slowdown in GDP from 3.8% in 2022 to 1.2% this year and 1% next year.
The OECD points out that “the Ongoing public administration, judiciary and competition reforms are well advanced and remain crucial for GDP growth in the medium term. But NewGenerationEU funds’ spending is significantly behind, with cumulative spending at the end of 2022 around 50% below initial spending plans, largely reflecting delays in the implementation of public investment projects,” say the Paris economists: “The priority should be to to quickly replace unfeasible projects with feasible ones and.” Strengthening the public administration’s ability to act effectivelyManagement and implementation of the public spending projects envisaged by the Pnrr.
“Italy’s “slightly tightening” fiscal stance “appears broadly appropriate.” and in the coming years, continued consolidation will be necessary to put the debt ratio problem on a more sustainable path.” OECD economists specify that “structural reforms will be a key element in supporting growth and reducing public debt.” Ratio and GDP”.
The OECD estimates that debt will fall to 140.7% this year and 139.4% in 2024, while the deficit will fall from 8% of GDP last year to 4.1% and then further to 3.2% will decrease in 2024. In particular, the OECD argues that “while fiscal policy strikes the right balance between fiscal prudence and support for growth in 2023-2024, More fiscal consolidation will be required in the coming years to move the debt ratio to a more sustainable path.”
According to the OECD, “Consolidation plans should include ambitious anti-tax evasion measures and comprehensive spending reviews to improve public spending efficiency”. Even the implementation of the Pnrr measures could have “the added benefit of reducing the debt ratio” by boosting growth.. The international organization also reminds that “the cost for the government to refinance the large stock of sovereign debt is also increasing, with debt servicing costs expected to reach around 4% of GDP in 2024”.
“The growth risks – so we read – are essentially balanced”, also thanks to the high household savings “which could lead to a faster-than-expected recovery in domestic demand.” “On the contrary,” warns the OECD, “adverse effects from the recent turmoil in the international banking sector or further delays in the implementation of Pnrr public investment projects could slow growth.”
What the development of high cost of living“Overall, the combination of lower energy prices, tighter financing conditions and moderately tight fiscal policies should lead to a gradual moderation of inflationary pressures while allowing for a modest recovery in activity.”
“Global Economic Developments They started to improve, however The recovery remains fragile“- continues the OECD in its Economic Outlook – global GDP growth is projected to slow from 3.3% in 2022 to 2.7% in 2023, before reaching a still modest 2.9% in 2024.” As Chief Economist Clare Lombardelli says: “The global economy is at a turning point, but faces a long and bumpy road to strong, sustainable growth.”e”. The outlook remains “significantly uncertain” and among the top concerns are inflation and the war in Ukraine.
The need to bring inflation down on a sustainable basis, adjust fiscal support and restart sustainable growth “pose difficult challenges” for government and central bank leaders in OECD countries, and “policymakers must take decisive macroeconomic and structural measures to create a stronger… and achieve more sustainable growth”.