Bad debt is Italy’s first concern

According to an OECD report, the Italian economy is emerging from a long recession, thanks to policy actions and reforms such as the Jobs Act.

The latest OECD Economic Survey of Italy said that a people-centered focus should be maintained to enhance employment, skills, productivity and well-being, and underlines the importance of putting Italy’s banks on a sounder footing. The situation of Italy’s banking system is quite alarming indeed since bad debt is almost making 20% of total outstanding loans.

As Italy’s GDP is projected to grow by 0.9% in 2016 and edge up to 1% in 2017 and 2018, the OECD stresses that “renewed financial market turmoil in the euro area or an aggravation of banks’ balance sheet problems could drive risk spreads higher, raise debt financing costs and require a fiscal retrenchment,” meaning tough austerity measures.