Italy

RGE's Q1 2010 Italy Outlook

Growth is set to resume in early 2010, albeit at a subdued pace in light of Italy’s structural weaknesses and the rather moderate recovery pace of the global economy. In particular, private consumption will disappoint in the next 12 months due to rising unemployment, weakening purchasing power, stagnant wage growth and the expiration of the cash-for-clunkers scheme. At the same time, the impetus from the external sector is likely to weaken in light of fading government programs abroad. While external demand will drive the economy in 2010, a swift export-led recovery is unlikely due to Italy’s inability to reverse the economy’s loss of price and cost competitiveness in recent years. As a result of this failure, Italy will prove unable to reap the full benefits of the rebound in global trade. Growth will remain below potential in 2010, with the economy displaying a sluggish, U-shaped recovery. A self-sustained recovery of the Italian economy is not expected until 2011, when an upturn in...

Read the Q1 2010 Italy Outlook.