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“These reforms have been courageous, ambitious and wide-ranging", Mr Gurría said at a joint OECD-Italian government conference in Rome. “But”, he added, “resolute implementation and continuation of the reforms are crucial. The success of Italy in overcoming these challenges will be decisive not only for the Italian people but for Europe as a whole.”
The reforms already approved by the Italian government could raise the country’s GDP by up to 4 per cent over the next 10 years, according to the OECD. Continuing the reform process would boost growth even more.
OECD analysis of the Italian economy presented at the conference underlines the scale of the challenge. Weak growth, high unemployment and high public debt has been compounded by slowing demand from trading partners and a persisting confidence crisis in the euro area.
Italy’s labour productivity over recent years has been the weakest among OECD countries. Low productivity growth has resulted in rising unit labour costs, which has in turn damaged Italy’s competitiveness and fuelled the current account deficit.
The OECD report says Italy must continue on its path of bringing its budget into balance by 2013. The OECD welcomes the recent spending review for shifting the burden of consolidation towards lower spending and away from higher taxation, but adds that ministries need to identify routinely the least efficient areas of spending.