European Economy

Italy Needs a Cure for Its Bad-Debt Headache

Non-performing loans risk smothering Italy's nascent recovery.

A drag on growth.

Photographer: Alessia Pierdomenico/Bloomberg

Italy's economy dragged itself out of recession this year, posting annual growth in gross domestic product of 0.8 percent in the third quarter. That, though, was only half the pace achieved by the euro zone as a whole. And unless the Italian government gets serious about tackling the bad debts that are crushing the nation's banking system, its economy will continue to underperform its peers.

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