Italy's economic recovery has been slow amid recent policy actions; however, private consumption has been seen facilitated by Eurozone's QE and flexible SGP implementation, along with the government's commitment to an ambitious reform agenda.
Even after witnessing moderate growth, the recovery of the economy looks weak and lags behind its eurozone counterparts. The economy is held back from a strong rebound as low corporate spending, competitiveness issues such as sluggish productivity and rising labour costs puts downward pressure. The difference in the growth rate between Italy and its peers is largely explained by weak investment and comparatively low exports, despite having similar bank credit and global growth conditions.
"We remain of the view that more reforms, including wide-ranging measures to raise public sector efficiency, improvements in firm-level wage bargaining and a rebalancing of the fiscal adjustment, are needed to spur investment appetite and regain export market share" - Barclays
