The third largest economy in the euro zone still behaves worse than investors want it to. The stability of the whole region may be challenged by the problems, currently observed in Italy, experts believe.
The Italian economy is growing at a rate slower than the euro zone on average, only adding 0.9 percent to its GDP in 2017. For comparison, the euro zone grew 2.1 year-on-year. And prospects for the next year are not much more inspiring. “The recovery is expected to continue, but risks ahead are significant,” say IMF officials.
The main problems include political instability, slower than expected reformation process, and what is probably the most important, high number of low quality loans. With higher interest rates, Italian debt will definitely be harder to sustain, ECB warns. Bad loans are believed to derail funds from high-performing projects and therefore lower the pace of the overall economic development. Italian public debt is at 133 percent of the national GDP, third-highest among all countries.
