November 25, 2024
Bank of Italy sees signs of recovery in chronically weak south #ItalyFinance

Bank of Italy sees signs of recovery in chronically weak south #ItalyFinance

CashNews.co

ROME (Reuters) – Italy’s underdeveloped southern regions, which for years have held back the national economy, are finally showing signs of closing the gap with the rich north, Bank of Italy Governor Fabio Panetta said on Thursday.

Over recent decades per capita gross domestic product in the south has been little more than half that of the rest of the country, Panetta said in a speech in the Sicilian city of Catania.

However, since the COVID-19 pandemic, the economy of the so-called “Mezzogiorno” has rebounded faster than the national average, and employment growth has been stronger.

Between 2019 and 2023 GDP has risen by 3.7% in the south versus 3.3% in the centre-north, Panetta said, while exports have grown by 13% against 9%, and employment has increased by 3.5% compared with 1.5%

“According to our latest indicators, the south’s economic expansion has continued in the first six months of this year,” the central bank chief said.

Panetta cautioned that the recent trend was partly due to temporary factors connected with post-COVID economic stimulus and welfare measures which have been focused more heavily on the south, but said structural factors also seem to be at play.

He cited evidence of “processes of restructuring and consolidation of production … that have expelled from the market weak, less efficient and typically smaller companies.”

To build on these encouraging signs, Panetta said southern regions needed to increase their output capacity through “investments and reforms, not welfare policies.”

In particular, investment was badly needed to upgrade the south’s road, rail and port infrastructures and to tackle chronic water shortages.

Panetta said Italy’s south could benefit from recent geopolitical crises that have made businesses more wary about where they site their production.

“Our southern regions guarantee conditions of geopolitical and economic stability, thanks in part to Italy’s membership of the European Union and the euro zone,” he said.

At the same time, the Mezzogiorno is strategically located “at the crossroads of the Mediterranean Sea,” through which a fifth of the world’s maritime traffic passes, he added.

(Reporting by Sara Rossi and Gavin Jones, editing by Christina Fincher)