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Ways in which Italy can get out of recession

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Ways in which Italy can get out of recession

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1. Leave the Euro
- The euro is making it harder for Italy to recover
-  Italy can drop out of the euro or set up a second-tier euro so as to let their currency depreciate. This would allow wages some flexibility to decline, and exports to rise.

2. Repair the banking system
-  Italian banks are not lending as they were hurt by nonperforming loans, this makes economic expansion difficult.

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-Raised its interest rate to fight the high rate of inflation.
: This contractionary monetary policy was carried out during the 1980s, where the Central Bank of Italy raised it interest rate to 19.0%. This results in less money to go around therefore, those with the possession of money would rather save it than to spend it. Reducing spending is important during inflation because it helps to halt economic growth and, in turn, the rate of inflation. This policy was very successful as it had caused the inflation rate to decrease constantly afterwards.

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1. Italy's Exchange Rate Policy

Italy introduced the euro from 2002 onwards. Italy had to maintain its exchange rate stable of +/-2.25% in order to prevent big fluctuations relative to the other European Economic Community (EEC). In order to prevent wide fluctuation bands, the Bank of Italy as part of the Eurosystem, participates in foreign exchange market interventions along with other central banks such as ECB and other National Central Bank of Eurozone.

A monetary policy tool which takes an active participatory role in influencing the monetary funds transfer rate of the national currency. The Bank of Italy will then intervene and conduct foreign exchange operations in order to build reserves, stabilize the exchange rate and to correct misalignments. The success of foreign exchange intervention depends on how central bank sterilizes the impact of its interventions, as well as general macroeconomics policy set by the government to balance inflows and outflows of foreign currency.

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Ways on how Italy can get out of recession

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Ways on how Italy can get out of recession

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-Reform political system

There are large number of political parties whom are greatly funded by the government. Hence, to escape recession, the government could make changes to its political system to ensure that sufficient funds are kept for the country to develop.

-Reduce corruption

As corruption is present in Italy, large amount of money can be used in transactions between powerful political parties for illegal transactions. This causes money to be wasted or lost which affects the welfare of the people in Italy as lesser money will be made available to them.

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-Reduce spending in order to stop economic growth which will then help control inflation
-Reduce the money supply by having policies that encourage reduction of the money supply.
-Increase reserve requirements on the amount of money banks are legally required to keep on hand to cover withdrawals.This means banks will have less money to lend to consumers. If they have less to lend, consumers will borrow less, which will decrease spending.

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Reform taxes
Italy has too many forms of taxes, ranging from individual income tax to national corporate tax to social-security tax. An individual in Italy pays up to 30% of his or her income to taxes, while an entrepreneur has to pay up to 60% of his or her profits in taxes. All these taxes need to be streamlined and reorganized, such as implementing flat-tax systems, which is a progressive tax system that, above the maximum deduction, the marginal tax rate on all further income is constant and is said to be 'marginally flat' above that point.
Loosen the labor markets
The regulations of the labor market, such as employers needing to go through a hassle like notifying the Ministry of Labor and a 20-day reconciliation process in order to dismiss one employee, causes firing workers in Italy to be a headache, and no firing means less hiring. Italy's entrepreneurial spirit is hence hindered by the deep layers of regulation. What the government needs to do is to loosen the regulations, or just reform them all together, so that entrepreneurs can hire and dismiss workers without going through the strict regulation process.

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Thank you for your Padlet submission.  The articles are interesting.  However, you may want to include the ways in which Italy can get out of recession due to its high debts, such as austerity measures like cutting down on government expenditure and increase its tax.  Hope to receive your written report!

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Thank you for your Padlet submission.  The articles are interesting.  However, you may want to include the ways in which Italy can get out of recession due to its high debts, such as austerity measures like cutting down on government expenditure and increase its tax.  Hope to receive your written report!

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Italy's inflation

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Italy Inflation, Debt Rise

Italy's annual inflation rate rose to 1.9% in April, up from 1.4% in March, according to ISTAT's flash estimate released on Monday. It is necessary to go back to January 2013, when the inflation rate was 2.2%, to find a higher figure. The national statistic agency added that its consumer price index was up 0.4% in month-on-month terms.
Meanwhile, Italy's public debt hit a new high of €2.2603 trillion ($2.48 trillion) in March, an increase of €20.1 billion with respect to February, the Bank of Italy said on Monday. The previous high was the 2.2522 trillion registered in June 2016, ANSA reported.
Late April, Italy's credit rating was cut closer to junk territory by analysts at Fitch, who cited "weak economic growth" and the country's "persistent track record of fiscal slippage".
Fitch reduced the rating to "BBB" from "BBB+", leaving it just two notches above speculative-grade.
"Italy's persistent track record of fiscal slippage, back-loading of consolidation, weak economic growth, and resulting failure to bring down the very high level of general government debt has left it more exposed to potential adverse shocks," the ratings group said.
Fitch added that Italy has "missed successive targets" for its debt-to-gross domestic product ratio, which rose by 0.5 percentage points to 132.6% last year.
At the same time, "banking sector weakness adds to downside risks to the economy and public finances," Fitch noted.

Short URL : https://goo.gl/lHxjSP

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Italy Inflation, Debt Rise Italy's annual inflation rate rose to 1.9% in April, up from 1.4% in March, according to ISTAT's flash estimate released on Monday. It is necessary to go back to January 2013, when the inflation rate was 2.2%, to find a higher figure.

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-Inflation rate
-CPI
-GDP Deflator
-Export & Import
-GDP growth]
-GDP per capita
-LFPR

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-GDP
-Unemployment
-Economic Crisis

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Submitted by Daniel Mitchell via The Foundation for Economic Education,
Early last month, in a column on my hopes and fears for 2017, I fretted about fiscal chaos in Italy leading to default and bailouts.
Simply stated, I fear that Italy, along with certain other "Club Med" nations, has passed the point of no return in terms of big government, demographic decline, and societal dependency.
And this means that, sooner or later, the proverbial wheels are going to fall off the bus. And it might be sooner.

I don't always agree with his policy recommendations, but I regularly read Desmond Lachman of the American Enterprise Institute because he is one of the best-informed people in Washington on the fiscal and economic mess in Europe.
And Italy, to be blunt, is in a mess.
Here's what Desmond just wrote about the country's economy.

And here's some of what he wrote late last year.

The numbers shared by Lachman are downright miserable.
And he's not the only one pointing out that Italy's economy is in the toilet.
I shared numbers last year showing the pervasive stagnation in the country.
So what's the Italian government doing to solve these problems? Is it slashing tax rates? Reducing the burden of government? Cutting back on red tape? Of course not. The politicians are either making things worse or engaging in pointless distractions.
Speaking of which, I'm tempted to laugh at the Italian government's campaign to boost birthrates. Here's some of what's been reported by the New York Times.

By the way, I actually commend the government for recognizing that falling birthrates are a problem.

Not because women should feel obliged to have kids if that's not what they want. But rather because Italy has a massive tax-and-transfer welfare state that is predicated on an ever-expending population of workers (i.e., taxpayers) to finance benefits to retirees.

But old people are living longer and low birthrates mean that there won't be enough taxpayers to prop up the Ponzi Scheme of big government.

But while the government deserves kudos for acknowledging a problem, it deserves mockery for thinking empty slogans will make a difference.

Moreover, there's also a problem in that Italian voters have been so conditioned to expect handouts that they think the answer to the problem is even more government!
Ms. Iacovella is crazy for thinking that more taxes, more spending, more regulation, and more mandates will make things better.
Heck, even leftists are now admitting such laws undermine employment and specifically hurt women by making them less attractive to employers.

Meanwhile, the Italian government is taking lots of other dumb steps. Including, as reported by the Telegraph, creating a new entitlement for teenagers.

By the way, is anyone shocked to learn that Italian teenagers look forward to these handouts?

If you read the entire story, you'll learn that the government justifies this new entitlement by saying it will fight terrorism. I don't know if that's more crazy or less crazy than the American leftists who blame terrorism on climate change or inequality.

Last but not least, CNN is reporting that the government is also enabling other forms of Italian "culture."

Italy's highest court has ruled that masturbation in public is not a crime, as long as it is not conducted in the presence of minors."

No, this is not a joke.

Great. I'm looking forward to my next trip to Italy. Though I guess it's nice to see Italian seniors are staying active in their communities.
More seriously, this is why I'm sympathetic to Italians that are either privately dodging or publicly revolting when you have a government this profligate and senseless. P.S. Amazingly, some leftists think the United States should have a bigger government and be more like Italy.

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Move Over Greece, Italy's Crisis Will Be Worse

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Submitted by Daniel Mitchell via The Foundation for Economic Education, Early last month, in a column on my hopes and fears for 2017, I fretted about fiscal chaos in Italy leading to default and bailouts. Simply stated, I fear that Italy, along with certain other "Club Med" nations, has passed the point of no return in terms of big government, demographic decline, and societal dependency.

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-GDP growth rate
-Recession
-Unemployment

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Gross domestic product (GDP) rose 0.2 percent from the previous three months, national statistics institute ISTAT reported, the same moderate rate as in the last quarter of 2016.

On a year-on-year basis, GDP was up just 0.8 percent, slowing from a 1.0 percent rise in the fourth quarter of last year. The data shows the euro zone's third largest economy, after a long recession that ended in 2014, is still struggling to build up sufficient growth momentum to significantly improve living standards or cut unemployment.

So-called "hard" data, such as industrial output and GDP, have so far failed to reflect extremely buoyant surveys of sentiment and activity levels among purchasing managers in both the manufacturing and services sectors.

Both the quarterly and annual rates of GDP growth in the first quarter were in line with the average forecasts in a Reuters survey of 24 analysts.

ISTAT said growth was supported by domestic demand in the first quarter, while trade flows were a drag on activity.

It gave no numerical breakdown of components with its preliminary estimate, but said industry had contracted, while services and agriculture were positive.

Over the whole of last year, Italy's economy grew 0.9 percent, around half the average rate of the 19-nation euro zone, following growth of 0.8 percent in 2015.

Its underperformance compared to its peers continued in the first quarter, when the euro zone as a whole grew by 0.5 percent, according to preliminary aggregate data released on May 3.

For 2017 Prime Minister Paolo Gentiloni's government forecasts Italian growth of 1.1 percent, slightly above the projections of most independent bodies.

So called "acquired growth" at the end of the first quarter stood at 0.6 percent.

This means that even if GDP were to be flat quarter-on-quarter throughout the rest of this year, over the whole of 2017 it would still be up 0.6 percent from 2016.

ISTAT gave the following details:

Q1 Q4 2016 Q3 2016 Q/Q (pct change) 0.2 0.2 0.3 Y/Y (pct change) 0.8 1.0 1.0

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Italy's economic growth remains weak in first quarter,...

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Gross domestic product (GDP) rose 0.2 percent from the previous three months, national statistics institute ISTAT reported, the same moderate rate as in the last quarter of 2016. On a year-on-year basis, GDP was up just 0.8 percent, slowing from a 1.0 percent rise in the fourth quarter of last year.

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Italy is the world's ninth biggest economy. About three quarters of the total GDP are made out of the service sector and with this it employs around 65% of the total nation's employment rate. The unemployment rate has increased constantly in the last seven years, which reached 12% in 2017.

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ITALY

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Grp Members.

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