Report: Italy faces 20 years of economic stagnancy

Jul 12, 2016, 4:20 AM EDT
Rome, Italy
(Source: Bob Hall/flickr)

The International Monetary Fund (I.M.F.) warned on Monday that Italy, the third-largest eurozone country, may not recover from 2008 financial crash until mid-2020s. According to the I.M.F. report, the U.K.’s decision to leave the European Union will lead to greater uncertainty, eventually leaving a big impact on Italy’s economic growth.

Italy’s unemployment rate has reached 11 percent, with its banking sector crippling under massive bad debts, writes the BBC. Italian banks suffered a fresh setback on Monday as the E.U. insisted on the country’s government to stick to state-aid rules that restrict Rome’s role in bailing out banks, overburdened by the non-performing loans (N.P.L.s).

The I.M.F. admitted that Italy showed a “gradual recovery” from a deep recession while adding that the country remains vulnerable to a “cocktail of threats,” including the refugee surge and slowdown in global trade, notes The Guardian.

Italian banks’ shares have seen 50 percent of their market value eroded since the beginning of the year. The I.M.F. report praised Matteo Renzi’s centre-left government for the reforms it has introduced to revive the banking sector, reports The Wall Street Journal. However, it added that the government should take “decisive steps” to help banks “clean up their balance sheets.”