Draghi Urges Structural Overhaul to End Italy’s ‘Stagnation’
Bank of Italy Governor Mario Draghi called for a structural overhaul to end the nation’s economic “stagnation” and blamed its chronically weak growth partly on the lack of opportunities afforded young people.
“It’s an absolute priority of economic policy today in our country to exit the stagnation by restarting development through structural measures,” Draghi, who will become president of the European Central Bank on Nov. 1, said in a speech at an event today in Sarteano, Italy. Italy must “remove a number of constraints and restrictions to competition and economic activity” and “set up a more benign institutional framework” for businesses.
Italy’s credit rating was cut three levels to A2 by Moody’s Investors Service on Oct. 4 following a one-step downgrade by Standard & Poor’s last month, both of which cited weak growth prospects as hindering efforts to cut Europe’s second-biggest debt burden. The nation’s economic expansion has lagged behind the euro-region average every year for more than a decade, and the International Monetary Fund last month cut its forecasts for Italian growth.
The weak expansion “in the last few years is also the reflection of the ever-more limited opportunities for the young generation to contribute to the economic and social development through their innovative capacity, their knowledge, their enthusiasm,” Draghi said.
Italian joblessness among those between ages 15 and 24 rose to 27.6 percent in August, from 27.5 percent in the previous month. The overall unemployment rate was 7.9 percent in August, national statistics institute Istat said on Sept. 30.
Prime Minister Silvio Berlusconi last month pushed through 54 billion euros ($73 billion) in austerity cuts in a bid to stem surging borrowing costs amid contagion from Europe’s debt crisis. The IMF on Sept. 20 lowered its growth forecast for Italy and said the government will also miss its target of balancing the budget by 2013. The economy will expand 0.6 percent this year and 0.3 percent next, the IMF forecast.
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