Visco says Italian economy stalled 20 yr

Bank of Italy governor sounds alarm on lagging productivity

(ANSA) - Rome, June 2 - For more than two decades, the Italian economy has failed to grow, mainly due to lagging productivity, Bank of Italy Governor Ignazio Visco said Tuesday.
    "For 20 years and more, Italy has not been growing, and the main influence is productivity," Visco told an economics event in the country's north.
    Italian debt was hit hard by the global economic crisis because governments "had not lowered the debt when they could," he said, citing that a significant opportunity lost.
    He noted that Italian individuals do not have high levels of private debt, but sovereign debt levels have consistently rose.
    Meanwhile, the devastating global financial crisis grew from errors made well before it erupted in 2007.
    That crisis was "generated by errors in various fields", from markets and regulators to bank supervisors.
    But lessons have been learned from those mistakes, added Visco.
    And deregulation in the financial sector has had the positive effect of expanding markets, he said.
    But "instability and social inequality" remain significant problems.
    Visco meanwhile said that bank reforms, which are being proposed by the government of Premier Matteo Renzi, could be important for the economy.
    Credit and lending has been "immobilized" and that must be unlocked.
    "Today, most of the business financing comes from other sources," he said.
    "A company that has to grow and invest in prospects with 10 and 15 years must seek funds on the market," which is not always possible.
    Banks instead must "have access to market capital," he added.
    At the same time, bank mergers must also be possible, he said.
    One measure of the continued weakness in the Italian economy has been persistent deflation in the overall rate of inflation.
    That has suggested sluggish demand for Italian goods and services.
    Indeed, for the third consecutive month, Italian inflation was negative in April with a rate of -0.1% on a year-over-year basis, the Organization for Economic Cooperation and Development (OECD) said Tuesday. Its figures matched earlier reports from Italy's national statistics agency Istat. The OECD calculated that in the eurozone overall, the consumer price index was stable in April after a drop of -0.1% in March. It said that in France and Germany inflation has risen from -0.1% to + 0.1%, and from 0.3% to 0.5%.