The general election in Italy this month poses a big threat to its economy as no one is more negative about it than the Italians. The nation may have begun to expand again, but it is still one of the worst performers among European countries. Will Italy’s economic recovery be at risks of fading away after its election?
About ten years when the Eurozone crisis began, the gross domestic product (GDP) of Italy has yet to return to the level it had in 2007. Issues like migration and debt have highly influenced voters, with the arrival of more than 600,000 migrants for the past four years. Unemployment is also a problem as it rose about 11 percent and youth unemployment is at 32 percent.
The support on the anti-immigration parties in Italy came in after more than 120,000 refugees arrived in the country, making right-wing parties to focus on migrants. World First’s head of currency strategy Jeremy Cook said that this issue will be the one to determine the real outcome of the Italian polls.
The nation is widely known to protest against the political mainstream. However, Italy’s solid economic growth for four years straight is still not enough to repair the damage of the two-year recession in 2012-2013 caused. The Organisation for Economic Co-operation and Development said only two countries are considered to be a rich nation in terms of economic activity, Greece is one and Italy is the other.
Probable effects of Italy’s vote
Parties have proven their power to alter Italy’s industry, employment market and economy. Still, a few witness the real improvements since the economic crisis. Its economic growth has been picking up since 2014 in terms of nominal GDP. Forecasts are showing that it would take about five to six years to return to the GDP rates seen in 2007. High debt is also a problem as Italy is currently the second worst in Europe.
The growing number of Italians only working at part-time jobs contributed to their unemployment problem. Although the Democratic Party of Matteo Renzi started promising job reforms in 2014, data suggests that 60 percent of the jobs consist of only part-time roles. A research form Luigi Zingales and Bruno Pellegrino showed that stagnating salaries lead to slow economic growth.
The Five Star Movement vs. the League Party
The anti-establishment Five Star Movement (M5S) has conquered the southern part of Italy where people are worried about the economy, while the far-right League Party took the north with immigration concerns.
The M5S has met more success as it won the majority of the votes in several areas. The party promises a basic income for Italians under the poverty line. Its surge was represented by results from Crotone province where jobless claims stand at 28 percent. Meanwhile, the anti-immigration rhetoric gave 20 percentage points to the League Party.
Italian polls might not fix its economic problems
Italy did not lose ground over the previous decade, its sluggish economy for a long period of time has resulted in two unwelcome legacies. Its public debt jumped as high as 100 percent of GDP on 2007’s final quarter to over 130 percent. Bad loans were also built up in their banking system, with businesses struggling with the weak economy.
A pile of non-performing loans in Italy have been the largest of any European countries. These following burdens are a hindrance to its full economic recovery.