World Economy

Poverty in Italy Triples

The level of absolute poverty increased among younger people, reaching 10% in 18 to 34-years-old group
In the south of Italy, 9.8% of people were living in absolute poverty.
In the south of Italy, 9.8% of people were living in absolute poverty.

Italy’s absolute poor, or those unable to purchase a basket of basic goods and services, reached 4.7 million last year, up from almost 1.7 million in 2006, national statistics agency Istat said. That is 7.9% of the population, with many of them concentrated in the nation’s southern regions.

In the south of the country, 9.8% of people were living in absolute poverty, compared to 7.3% in central areas including the capital Rome, and 6.7% in the north, including the business capital Milan, the report shows, news outlets reported.

Absolute poverty is defined as the condition preventing people from buying goods and services “essential to avoid grave forms of social exclusion,” according to Istat.

The report also reveals the level of absolute poverty increased among younger people, reaching 10% in 18 to 34-years-old group. However, the number of poor dropped among seniors to 3.8% in the age group of 65 and older.

The numbers rose because of a record-long recession.

In the period from 2008 to 2013 Italy passed through the deepest and the longest recession since World War II. The crisis erased over 25% of the country’s industrial production and the unemployment rate grew from 5.7% in 2007 to 13% in 2014.

Though the country managed to emerge from the crisis three years ago, the slow growth reported since then has failed to help the poorest sectors of society.

Despite an optimistic forecast for growth of around 1.1% this year, up from 0.9% in 2016, Italy will remain among the eurozone's most sluggish economies.

Fertility Rate Drops

At the same time, the fertility rate in Italy is on the downward trend as well—just 1.35 children per woman compared with a 1.58 average across the EU as of 2015.

“The poverty report shows how it is pointless to wonder why there are fewer newborn in Italy. Making a child means becoming poor, it seems like in Italy children are not seen as a common good,” said Gigi De Palo, head of Italy’s Forum of Family Associations, as quoted by Bloomberg.

Istat adds that the scope of relative poverty also increased last year. This index is based on the average consumption expenditure and affects a larger group of people.

In relative terms, the number of poor Italians in 2016 edged up to 8.5 million people or 14% of the population against 13.7% year-on-year.

Bad Loans Decline

Italian GDP is expected to grow 1.4% this year, 1.3% in 2018 and 1.2% in 2019, according to the Bank of Italy. In forecasts released in January, the central bank had forecast annual GDP growth at 0.9% for 2017 and 1.2% for both 2018 and 2019.

So growth projections of Italian economy are revised upwards. This is not the only good news in the report by Italian central bank: In the first quarter, in fact, the flow of new non-performing loans in Italy has fallen to levels since in 2008, the first year of the global crisis, according to the Bank of Italy. In the first three months of the year, the ratio of new bad loans stood at 2.4% of outstanding loans, with the ratio reaching 3.6% for firms and 1.6% for households.

Employment Growth

Employment growth, Bank of Italy adds, proceeded despite the ending of the incentives to hire new staff on permanent contracts. Credit to the non-financial private sector continued to record modest growth, sustained by loans to households.

Corporate lending, which was slowed in part by firms' abundant liquidity, remained differentiated according to firm size and sector of economic activity. Credit quality improved further.

Consumer price inflation, central bank adds, will remain low this year and next year, and rise to 1.6% in 2019, in response to a moderate acceleration in wages.

This scenario, Bank of Italy underlines, rests of the assumption that monetary and financial conditions will remain expansionary, in line with market expectations. These growth projections are subject to mainly downside risks: in addition to the uncertainties linked to the financial markets there are those connected with future global economic and trade policies.

Downside risks to inflation could stem from slower than projected wage growth, while the evolution of energy commodity prices in the near future continues to be highly uncertain.


Add new comment

Read our comment policy before posting your viewpoints