Italy’s Economy: Strengths, Weaknesses, and a Spanish Model

Expert Analysis Highlights Growth Slowdown and Path Forward

The Italian economy’s current health, shadowed by international risks and internal challenges, was the subject of intense discussion at a recent workshop organized by the General Agency of Cremona. Esteemed professor Carlo Cottarelli guided attendees through the nation’s economic landscape.

International Headwinds and Domestic Progress

Francesco Cozzoli, the General Agent, introduced Professor Cottarelli, emphasizing his distinguished background with the Bank of Italy and the International Monetary Fund. Cozzoli noted the current international climate as significantly destabilized and uncertain, making Cottarelli’s insights invaluable.

“We live in an international context which is strongly destabilized and is characterized by uncertainty. And also for this reason we decided to invite Professor Cottarelli: in his background he boasts the Study Office of Bank of Italy and even the International Monetary Fund. He can therefore give us a vision that is not only the academic one, of financial teachers, but it is also that of the world and international economy.”

—Francesco Cozzoli, General Agent

Professor Cottarelli offered a mixed assessment of Italy’s economic standing. He highlighted positive developments, stating, “The good news is that we are no longer in the crisis in which we were ten or fifteen years ago: We are growing; ours debt remains high but is considered less risky; In the last two and a half years, we have grown slightly less than the average of the euro area, but we are no longer the tail lights.”

The Spain Comparison: Lessons in Competitiveness

However, Cottarelli also pointed to concerning trends, explaining, “The bad news Instead… is that we are no longer the tail lights not because we have accelerated but why other states, like Germany, they slowed down: compared to the countries of southern Europe, for example, we are growing much less quickly; in particular with respect to the Spain, but also to Portugal and Greece.”

To illustrate potential paths for improvement, Cottarelli drew a direct comparison with the Spanish economy. He identified several areas where Spain holds a distinct advantage.

“If we confront Spain,” Cottarelli commented, “can be seen different areas in which the Iberian state has an advantage: first of all, it has one tax burden At 37%, therefore much lower than ours which touches almost 43%. He then has one bureaucracy Fast: construction permits are obtained, for example, much faster in Spain than with us; The faster is also the justice.”

He further elaborated, “Not only that… the cost of energy it is lower and, finally, it has a good flow of immigration Regular: an advantage, this given by the ‘proximity’ with Latin America, which we do not have. The latter problem is the most difficult to solve; On the other four, if we rush our sleeves, we could do something.” According to Eurostat, Spain’s tax-to-GDP ratio was 37.1% in 2022, compared to Italy’s 42.5% (Eurostat).

Trade Tensions Loom

The discussion also touched upon the ongoing trade war and the potential for tariffs to be imposed on European countries, including Italy. Cottarelli expressed a cautious optimism regarding a resolution.

“We have to see what happens in the next two weeks… we have taken steps to what he asked Trump. I hope anyway, I am still confident Even if less than before, on the fact that in the end we arrive at an agreement that is fair.”

—Carlo Cottarelli, University Professor