Italy New Government Facing Economic Crisis
New York: While the formation of a new coalition government in Italy may help to stabilize markets rattled by weeks of uncertainty, this does not signal an end to Italy's economic woes.
A slew of old problems such as stifling bureaucracy and deep-rooted corruption has made it difficult for Italy to pull out of its political and economic crisis. "We have had a very big decline in investment in the last 10 years so we could not succeed in making reforms in Italy. We have a lot of problems from the labor market and also we have problems with productivity growth," said Umberto Triulzi, an economics professor at Sapienza University in Rome. Most alarming is Italy's national debt which is nearly 2.7 trillion U.S. dollars. As a member of the European Union, Brussels has placed strict and unfavorable austerity measures on the country to stop it from defaulting. Italy's public debt now stands at around 132 percent of gross domestic product (GDP), more than double of the 60-percent limit set by the EU. "We have to reduce the debt ratio, the bill, which is today 132 percent over the bill, up to 60 percent. So we are obliged in the next 20 years to reduce by 120 percent the debt ratio in the 20 years. So it's very heavy and the austerity doesn't help us to grow, because we cannot invest because we are too much in debt," said Triulzi. Over the past nine years, Italy's annual economic growth has struggled to reach one percent, while its unemployment rate hovers around 11 percent. The sluggish economy has pushed millions of Italians into poverty. According to statistics, since 2008, the number of Italians at risk of poverty rose by 3 million, the largest increase of any EU nation. "The Italians have been fighting for decades with a huge burden of public debt and this is not improving. And sometimes the so-called populist parties seem to want to discharge the problem on the shoulders of the European system. But if you think clearly about that, Italian public debt is to be blamed on the Italians, so we should take responsibility for that in order to save Europe," said Alberto Castelvecchi, a sociologist at LUISS Guido Carli University. Some may argue that is what Italy's new euroskeptic populist administration plans to do by implementing expensive programs to help create jobs, but it is unclear how the EU will react to this and if these budget policies could set off a ripple effect across the union.