Italy: Cyclical upswing, what will 2018 bring? – Rabobank

The Italian economy has notched up a gear, catalysed by an improved external environment and analysts at Rabobank expect growth to have accelerated to 1.6% in 2017.

Key Quotes

“We believe growth will decelerate slightly to 1.4% in 2018 and 1.2% in 2019.”

“The political backdrop has improved slightly, insofar as the Rosatellum electoral law has averted the risk of an outright majority for the Five Star Movement.”

“The centre-right coalition, led by Forza Italia and the Northern League, is leading the polls.”

“But there is very little scope for further structural reforms.”

“Despite the cyclical recovery in the next two years, Italy’s potential growth rate remains low at 0.5%-1.0%. Absent any structural austerity or growth raising measures, it will take a long time before public debt to GDP will return to moderate levels.”