The OECD has high hopes that Italy will emerge from a long drawn-out period of stagnation, but only if the reforms, which include an overhaul of the labour market and taxation system, are properly implemented, the Paris- based organization said in a report presented in Rome on Thursday.
Italian Prime Minister Matteo Renzi’s reforms also include a revamp of the electoral process and the painfully sluggish judicial system as well as the education system.
But the OECD said the real game-changer would be the so-called Jobs Act, which was backed by the Senate in December and aims to bring more flexibility to Italy’s job market.
In a statement, OECD Secretary-General Angel Gurría said: “Italy is progressing on an unprecedented path of reform, that will not only boost growth and employment, but that, being a core country, will also bring confidence at the systemic, European level.”
He added that the reforms “will also enable more resources to be directed to vital areas such as education, a fairer social safety net, improved support for job seekers and key infrastructure investment.”
But it will be some time before the changes make an impact on Italy’s economy. In a report in January, the European Commission forecast Italy’s GDP to grow by 0.6 percent ths year – slightly better than previously forecast – and will rise to 1.3 percent in 2016.
The gradual return to growth will be mostly spurred by growing demand overseas for Italian products.
The stimulus programme announced by the European Central Bank in mid-January is also expected help the recovery.