The Econmist - USA (2021-11-06)

TheEconomistNovember6th 2021 45

Europe

Italy

The Mario magic

F

or thepast  six  months  Italians  have

been floating from triumph to triumph.

It  began  in  May  when  an  Italian  band,

Maneskin,  won  the  Eurovision  song  con­

test.  In  July  their  men’s  football  team  be­

came  Europe’s  champions  and  in  August,

at  the  Olympics,  their  male  sprinters  as­

tonished the sporting world, claiming gold

in the 100 metres and 4 x 100 metres relay.

In October an Italian scientist, Giorgio Par­

isi, shared the Nobel prize for physics.

Italy has meanwhile had what is, for it,

the novel experience of being governed by

an internationally respected prime minis­

ter,  Mario  Draghi,  with  a  huge  parliamen­

tary  majority  that  allows  him  to  turn  his

projects  swiftly  into  law.  Supported  by  an

effective  vaccination  campaign,  the  econ­

omy  is  recovering  strongly.  On  October

28th  Mr  Draghi,  a  former  president  of  the

European Central Bank, forecast economic

growth  this  year  of  “probably  well  over

6%”,  though  few  expect  Italy’s  gdp to  re­

gain  its  pre­pandemic  level  until  2022,

well  behind  America  and  Britain,  among

others.  But  Standard  &  Poor’s,  a  rating

agency,hasreviseditsoutlookforItalian

debtfromstabletopositive,andItalians

canlookforwardtoa periodinwhichtheir

governmentwillbeina position—under

anobligation,indeed—tospendliberally

forthefirsttimesincethedaysofthepost­

war,American­fundedMarshallPlan.

Italystandstobethebiggestbeneficia­

ryinabsolutetermsoftheEU’spost­pan­

demicrecoveryproject.FromthecoreRe­

coveryandResilienceFacilityalone,itis

duetoreceive€191.5bningrantsandloans.

Suchaninfluxofcashcannothelpbuthave

animpactonaneconomythat,evenbefore

covid­19,hadbarelygrownthiscentury:in

realterms,Italy’sgdpin 2019 wasonly4%

aboveitslevelin2000,thankstoa combi­

nation ofslow growthineventhe best

yearsandbigdeclinesinthebadones.Real

gdpperpersonwas1%lowerovertheper­

iod,compared withincreases of16% in

Franceand24%inGermany.OxfordEco­

nomicsestimatesthatoverthenextthree

tofouryearstheeu’srecoveryprojectwill

addonaverageahelpfulannual0.5per­

centagepointstoItaliangdpgrowth.

EnzoMoavero,a professoratluissuni­

versityinRomewhohasservedasa non­

party minister in three recent govern­

ments,warnsthattherealchallengeforMr

Draghi will be to deliver sustainable

growthatorpreferablyabovetheEuropean

average.This,hereckons,willrequire“ef­

fectivereformsthatleadtothoroughgoing

structuralchange.”

Theeu’s recoveryprojectisdesignedto

addressthatissue.Itmakestheallocation

offundscontingentonspecificreforms

andinvestmentsaimedatimprovingthe

growthprospectsofmemberstates.Italy

hassofarbeengivenaninitial€25bnwith

nostringsattached.Butitwillhavetosat­

isfya daunting 51 requirementsbytheend

oftheyeartoqualifyforthenexttranche.

R OME

Italy’s new prime minister has had a goodninemonths.Butthereisa lotleftto

do, and not much time to do it in

→Alsointhissection

46 Portugal’sgovernmentfalls

48 Climateandgastronomy

48 GayclubsinGeorgia

49 TurksinGermany

50 Charlemagne:TheEU’snoisy

Britishneighbour

Slow progress

Italy, GDP per person, 2017 $ at PPP*

2000=100

Source: IMF World

Economic Outlook *Purchasing-power parity

1

105

100

95

90

2000 05 10 15 21