“There is a big difference between rise and rebound, often used interchangeably: the rebound indicates the return to the initial situation, after a descent. The rise signals a new trend. Italy's problem today is to transform the current rebound into a real upturn”. Thus, with an effective image as usual, Mario Deaglio, economist "lent" to journalism (he was the first protagonist of the transformation of Il Sole 24 Ore, he is now professor of Economic Policy at the University of Turin), photographs the current situation of the Bel Paese in the XXth report on the global economy edited by the Einaudi Center, which by title has a question: "The recovery, what if it were our turn?".
Give us an answer: optimistic or not?
“Looking backwards, it is legitimate to ask the question that many Italians ask themselves: will Italy make it? Investments have fallen by 30 per cent in the last eight years, private consumption by 8 per cent. But the recovery is a realistic prospect. Of course, in the last twenty years the Italian economy has greatly reduced its presence in key sectors. And it was on the verge of a devastating financial crisis. But the profile of the country has not changed only in a negative sense”.
The signs are there, both in the private economy and in public finance, the report reads. But isn't this a too slow and still fragile trend?
“Let's consider some simple mathematical relationships: a increase in domestic demand by 2-2,5 percent, in our view reasonable and sustainable over the long term, can lead to a 1,5-2 percent increase in GDP. Ten years of growth at these rates, assuming an unchanged volume of public debt, lead to a drop in the debt/GDP ratio from the current 135 to 120 per cent. The deficit/GDP ratio could fall below 2 percent. In these conditions we can count on an increase in “good” employment, that is competitive at an international level and linked to the increase in productivity, in the order of 150-200 thousand units per year”.
A long journey…
“Of course, a “long” journey, without the possibility of “breaking through” but with the need to persevere. Precisely perseverance could lead to a progressive acceleration of the growth rate, if only for the diffusion of a climate of confidence between households and businesses. In this perspective, the Jobs Act was a happy move".
However, the report refers to Italy's "structural wounds". First of all, the eternal southern question.
“In terms of jobs, during the crisis, the Mezzogiorno has lost more than double (575 thousand units) of what happened in the Center and North (235 nila). Furthermore the current recovery is not affecting the South. There are 290 Italian families who have fallen into poverty due to the crisis, in the South there are around 200. It would be completely unrealistic to think of a similar growth of the gap through the expansion of the fiscal residue transferred to the South”.
What to do then?
“The first action should be that of recovering the efficiency of European funds. To consider the investment in infrastructure which also requires other resources. It is inevitable convert part of current government spending into investment spending. A range of measures should then be experimented to attract investments in the southern regions and encourage the absorption in young human capital”.
That's enough?
“It must be remembered that economic measures, tax incentives and anything else the rulers' imagination can come up with will not be sufficient if the basic conditions are not profoundly affected: must change the attitude part of the population regarding growth and development, today often considered as something extraneous or as a duty of the state".
In short, there are problems, but a little optimism doesn't hurt. Is that it?
“Let's say you can feed a subdued optimism. It is necessary that no geopolitical disasters occur, at the level of the global economy or of the climate. The answer largely depends on us: on a set of decisions ranging from economic policy to family policy on spending and savings, on the existential choices of young people between studying and not studying, between staying in Italy or emigrating. In short, no one should indulge in easy triumphalism. But we should all have a reasonable, contained and subdued optimism”.
So far the survey on Italy which is only a chapter of the usual, exceptional, synthesis work on the global economy. But perhaps the real novelty lies right here: the age of the global economy is coming to an end in a planet that is starting to be more fragmented and, if possible, even more complex. A picture showing that, all in all, we are not the last of the class.
