OECD Economic Outlook, Volume 2005 Issue 2
Twice a year, the OECD Economic Outlook analyses the major trends and examines the economic policies required to foster high and sustainable growth in member countries. Developments in major non-OECD economies are also evaluated. The present issue covers the outlook to end-2007. Together with a wide range of cross-country statistics, the Outlook provides a unique tool to keep abreast of world economic developments. In addition to the themes featured regularly, this issue contains an analytical chapter addressing the recent run-up in house prices.
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Italy
The recession ended in the spring of 2005. Domestic demand has been stimulated by labour
deepening, disinflation, fiscal ease and supportive monetary conditions. Exports have benefited from
euro depreciation and recovery elsewhere in the euro area, but imports are also rising markedly.
The pass through of higher oil prices will limit the strength of the recovery in 2006, but as these
effects dissipate household consumption should support an acceleration of GDP in 2007.
The sustainability of the recovery depends on reversing highly unfavourable trends in international competitiveness and public debt. In particular, real wage growth needs to be better aligned with productivity, while public spending must be restrained sufficiently to lower the tax wedge and restore the primary surplus. Service sectors should be opened to competition to boost productivity.
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