ROME: Italian Prime Minister Matteo Renzi’s mounting problems were compounded on Friday when data showed a long-awaited economic recovery is already losing steam. Not much has been going right for Renzi lately. His approval ratings have plummeted, his governing party is deeply divided, his parliamentary majority is fragile and his economic reforms are struggling to make an impact.
After assurances from Renzi and Economy Minister Pier Carlo Padoan that they expected positive surprises as the recovery picked up pace after three years of grinding recession, the latest data provided little comfort. Growth was just 0.2 percent between April and June, statistics bureau ISTAT said, below analyst expectations and slowing from 0.3 percent in the first quarter.
It is a familiar story for Italy, the euro zone’s third largest economy. Overall it has posted virtually no growth since it joined the euro zone as a founder member 16 years ago, making it the most sluggish performer in the bloc, even worse than Greece. The economy ministry said the data left Italy on track to reach the government’s 0.7 percent growth target for 2015. But even this would again be less than half the projected euro zone average.
It would also be a very poor return given a weak euro, which should boost Italian exports, low oil prices and rock-bottom interest rates generated by the European Central Bank’s bond-buying programme. The same favourable conditions are benefiting Spain, the euro zone’s fourth largest economy and which, having endured a tough economic reform programme, is forecast to grow by more than 3 percent this year.
LISTLESS Italy’s comparatively listless recovery, even if confirmed, would not be enough to appreciably improve living standards or bring down record high unemployment. Giorgio Squinzi, president of employers’ lobby Confindustria, said Friday’s data “unfortunately confirms that there is no real recovery”. “The situation for Italy remains precarious and the recovery is far from established,” added Raj Badiani, senior economist at IHS Global Insight.
