Italy notched up its best annual economic growth since 2010 in a year where the eurozone’s third largest economy was beset by a host of political and banking problems.
Annual GDP growth accelerated to 0.9 per cent in 2016 from 0.73 per cent the year before, according to the latest figures from it Istat, though expansion in the fourth quarter came in at a slower than expected 0.2 per cent (estimate 0.3 per cent).
Despite the upturn, Italy’s economic performance lags far behind Germany, the continent’s largest economy, where GDP expanded 1.9 per cent last year. Italian growth has not exceeded 1 per cent a year since the height of the eurozone crisis six years ago.
Still, the figures suggest the country has benefited from a broader cyclical upturn in the eurozone, helped along by record amounts of monetary stimulus from the European Central Bank.
Italy has been plagued by low growth over the last two decades. It is the only one of the eurozone’s 19 member states to see its GDP per capita fall since it joined the single currency in 1999, with sluggish expansion, rising debt levels and double digit unemployment weighing down on its banking system.
The economy is not expected to return to it pre-crisis size for another decade having shrunk by 1.5 per cent between 2008 and 2012, according to the International Monetary Fund.
Annual GDP growth is forecast to remain at 0.9 per cent this year rising to 1.1 per cent in 2018, according to the latest figures from the European Commission.
Low growth has also pushed up the country’s debt to GDP pile, with the EU expecting debt to grow to 133.2 per cent from 132 per cent this year – the second highest in the eurozone after Greece.
An imminent government bailout of the country’s oldest bank, Monte dei Paschi di Siena, will also push up its debt mountain, with Brussels warning Rome will have to carry out more belt tightening to meets its budget limits over the next two years.