tag:blogger.com,1999:blog-3949752.post1051974416909983227..comments2023-04-29T17:39:27.807+02:00Comments on Italian Economy Watch: Italy GDP Q4 2007 and Q1 2008Unknownnoreply@blogger.comBlogger3125tag:blogger.com,1999:blog-3949752.post-50285764581019901702008-05-27T15:16:00.000+02:002008-05-27T15:16:00.000+02:00Ciao Edward, any chance of getting Italy out of th...Ciao Edward, any chance of getting Italy out of the Eurozone? Then they could devalue like Argentina. You'd think foreign investment would flow in and growth rates could be 5%? Oh no ... won't work, the sovereign debt is linked to its neighbor's economies.<BR/><BR/>Seriously though, Italy may have "avoided" an official recession (and let's not hold our breath for that), but as far as I am concerned, they have been in recession for years. Just like you said, this is a long term problem.<BR/><BR/>1) Italy's eco. growth rate has lagged for years behind its Euro counterparts<BR/><BR/>2) Italy would have to string together a long-term positive eco. growth rate over the span of several years to gain back what it has lost vis-à-vis its peers and to gain back what it has lost itself, plus Italy would have to sustain a growth rate for a second long phase to begin to create the eco. development that would add value in the global economy and provide opportunity for its people.<BR/><BR/>Recap:<BR/>1-Several years of growth to make up for long term losses and pay pension bills<BR/>2-Several more years of growth to began creating economic opportunity for Italians.<BR/><BR/>As a connaissance from Rome said to me once last year "we have already done our hard work in the world, now it's time to rest".<BR/><BR/>And with that, I rest my case that Italy's inabilities also stem from the attitudes of its 25-44 population. You cannot blame everything on the old geezers in power, like the young tend to do.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-3949752.post-26663441887724004202008-05-25T12:27:00.000+02:002008-05-25T12:27:00.000+02:00Hello Callum,"Well at least it didn't officially f...Hello Callum,<BR/><BR/>"Well at least it didn't officially fall into recession..."<BR/><BR/>Yes, so I suppose we can be thankful for small mercies, though at this stage this is a rather technical virtue. Italy's problem, as I say in the post, is long term, and tghe trend growth rate has been - as can be seen in the chart - steadily falling towards zero over the last decade. This raises the possibilility that it might turn negative at some point.<BR/><BR/>How much of this is simply due to bad policy, and how much is an effect coming from population ageing we simply don't know at this point, but it is something which should be constantly borne in mind.<BR/><BR/>"Ireland and Spain both dug themselves out of the dungheap through housing/construction booms and the knock on effect on domestic demand."<BR/><BR/>Yep, but both Spain and Ireland have very different demographic profiles at the present point, and anyway look what is happening to them now.<BR/><BR/>I think basically it is unrealistic to expect any major "ressurgence" in domestic demand. If we look at Japan and Germany which have the same median age - 43 - we see a similar picture.<BR/><BR/>Basically what sets Italy apart is its inability to create a trade surplus to get the growth it needs to support the rising elderly dependent population. I don't know how realistic this is, but if it isn't realistic for Italy then it is going to be even less so for a whole line of newly emerging economies who are now steadily moving up the median age slots, so some solution needs to be found, and the experimental test bed here is going to have to be Italy. I hope everyone is ready for this.<BR/><BR/>"Italy burns while Berlisconi fiddles!!!"<BR/><BR/>Well quite. But I'm not exactly sure what they are thinking about over at the ECB or in the EU Commission on this score either. If Italy can't grow then the sovereign debt is unsustainable and its as simply as that, even if the implications are huge.Edward Hughhttps://www.blogger.com/profile/10384039867580949531noreply@blogger.comtag:blogger.com,1999:blog-3949752.post-15215214354866208832008-05-24T00:51:00.000+02:002008-05-24T00:51:00.000+02:00Well at least it didn't officially fall into reces...Well at least it didn't officially fall into recession...if any plus point can be derived from this info. So the deficit gets worse but Berlusconi commits to a €5 billion bridge that won't be finished for at least 3years (and knowing Southern Italian timeframes probably more like 5 years) A matter of national urgency, he has said of the Reggio-Messina bridge. Why? The tax cuts on housing I do agree with in principal; Ireland and Spain both dug themselves out of the dungheap through housing/construction booms and the knock on effect on domestic demand. Italy hasn't had the building boom that has affected (or afflicted depending on how you look at it) Spain, Ireland, or even the US and UK. I don't think its the answer, but anything to boost internal demand must be good. To fund the cut in tax I hope they're cutting wages of Italy's overpaid political caste...<BR/>Italy burns while Berlisconi fiddles!!!Gohttps://www.blogger.com/profile/07214289144361700142noreply@blogger.com