World Economy

Italy Under Pressure to Promote Waning Growth

Economic growth and immigration are the two major political issues in Italy
The Bank of Italy revised its growth estimates down to 1.3% for 2018, and to 1% for 2019.The Bank of Italy revised its growth estimates down to 1.3% for 2018, and to 1% for 2019.

Italy's already weak growth forecasts were revised downwards on Friday, a potential roadblock to the country's new anti-establishment and far-right coalition government's expensive promises amid trade tensions between the United States and the European Union.

The Bank of Italy revised its growth estimates down to 1.3% in 2018, against the previous forecast of 1.4%, while 2019 growth dropped to 1% from 1.2%, AFP reported.

"There are significant risks to the recovery of the global economy", warned the central bank, adding that the risks stemmed from "the possible intensification of the protectionist orientation of trade policies, with negative repercussions on business confidence, the expansion of trade and global demand".

Italy's government—made up of an alliance between the populist Five Star Movement and nationalist League—made a series of costly pledges in their joint government program that the two parties said would be financed by economic growth.

The promises, which include significant tax cuts combined with a basic income for the unemployment and those living on low wages, have been estimated as costing as much as €100 billion ($117 billion) to an economy weighed down by a €2.3 trillion debt running at 132% of the country's GDP.

New Minister of Economy and Finance Giovanni Tria this week said no to a request from Brussels to reduce Italy's structural deficit by 0.3% in 2018.

Growth revisions came after the European Commission also lowered its growth forecasts for both Italy and eurozone as a whole thanks to the bitter trade standoff between the bloc and the US ignited by US President Donald Trump.

The commission predicts Italian gross domestic product growing 1.3% this year (also down from the previously forecast 1.5%) and 1.1% for 2019 (down from 1.2%).

Immigration Problem

Economic growth is one of the two major political issues in Italy. The other is immigration. Italy has taken in 750,000 immigrants. The EU cannot solve Italy's immigration problem; other EU members have problems with immigrants, too, and no law or policy on this subject will solve this EU-wide problem.

Lack of EU help for Italy's immigrant problem has turned Italians towards anti-EU populism. 5-Star became Italy's largest party by running a strong anti-EU and anti-immigration campaign. This is likely to continue with an unstoppable rise in populism and the growing political power of younger voters. Italy has changed from a very pro-EU country to a strongly anti-EU country, and all the ingredients are at hand for this to continue.

Italy is collapsing and yet nothing has changed in this country for "at least thirty years,” said Carlo Gaetani, an engineer. He says with conviction that he voted for 5-Star because it is “our last hope”.

Apparently a lot of other young people agree because they are flocking to 5-Star and the League. In just the three months since the March election, the League's popularity has grown from 17% to 28%.

Promoting Tourism

Italy's capital is densely packed with rich cultural and historical sites, including the Colosseum and the Pantheon. It boasts top restaurants specializing in the world's most popular cuisine, Xinhua reported.

So why is Rome only the world's 16th most visited city? According to the Mastercard Global Destinations Cities Index, Rome attracts 7.1 million tourists every year, fewer than 15 other cities. The city attracts less than a third of the 21.5 million who travel to Bangkok, the top-ranked destination, every year.

Dubai, in fourth, attracts twice as many tourists as Rome. The Italian capital is also ranked behind Kuala Lumpur, Amsterdam and Seoul.

"All the cities ranked higher than Rome are compelling in their own ways, but, like a lot of Italy, Rome does a very bad job at selling itself," Marco Brogna, president of the economics of tourism program at Rome's La Sapienza University, told Xinhua.

"When many people think of coming to Rome, they don't think of the Renaissance artwork or the architectural wonders of the city. They think the city is inhospitable, dangerous and dirty."

The public relations problem is prevalent across Italy, which is just the fifth most visited country in the world, according to statistics from the United Nations World Tourism Organization: France, the United States, Spain and China all attract more tourists than Italy.

"Thirty years ago, Italy was the top destination in the world for travelers," Brogna said. "Now it has to worry about falling even further down the list."

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