After the referendum and Renzi's resignation, a new government has been formed from the existing parliament. Paolo Gentiloni, foreign minister in Renzi's cabinet, is the new Prime Minister, and the composition of the new cabinet is very similar to Renzi's team. We expect the new government to focus on harmonising the electoral system. It is possible that once the new electoral system is in place there will be elections. But designing new electoral laws could take up most of 2017.
Meanwhile, the banking situation is far from resolved and Italy needs a strong government in the months ahead to deal with this significant problem and its repercussions for the wider economy. This was clear when, at the end of 2016, the ECB told the Italian government that Monte dei Paschi bank would need an extra EUR8.8bn of capital.
Recent indicators on the state of the economy are mixed. The manufacturing PMI for December reached its highest level since June 2016, but the labour market has struggled to make further progress in recent months, and inflation has moved into positive territory.
Against this background, we see the economy growing by only 0.6% in 2017 after an estimated 0.9% last year. We believe that uncertainty following the 'no' vote at the referendum will continue to have some economic impact in early 2017. However, a surprisingly quick fix to the political situation and relatively calm financial markets probably means some upside risk to our growth forecast.
Table Of Contents
Country Economic Forecasts > Italy Italyand#58;
The following represents a general Table of Contents outline for the Country Economic Forecast. The actual report may cover any or all of the topics listed below.
Highlights and Key Issues - four/five paragraphs of analysis covering the main economic and political issues contained in the subsequent Economic Overview
Forecast Table showing % changes for the country - with 2 years of historical data and 4 years of forecast data for the followingand#58;
Stockbuilding (% of GDP)
Exports of goods and services
Imports of goods and services
Current account balance (US$ and % of GDP)
Government budget (% of GDP)
Short-term interest rates (%)
Long-term interest rates (%)
Exchange rate (vs. US dollar)
Exchange rate (vs. euro)
Economic Overview - two pages of events-driven analysis highlighting the most recent economic activity and, where relevant, political developments of the country, detailing significant changes to Oxford Economics' forecasts
Charts and Tables - covering a full range of economic developments relevant to the time period covered. These could include such topics asand#58;
Contributions to GDP growth
Monthly industrial output
Business and consumer confidence
Prices and earnings
Consumption and investment
Government balance and debt
GDP and industrial production
Monetary policy and bond yields
Background Information on the country
One or two pages of text covering the main historical political and economic factors that determine the country's current position
Key Facts on the country
Map of the country
Key political facts
Long-term economic and social development - changes since 1980
Structure of GDP by output - latest year
Long-term sovereign credit ratings and outlook
Corruption perceptions index- latest year
Structural economic indicators - changes since 1990
Destination of goods' exports -prior years - latest year
Composition of goods andamp; services exports - latest year