Italy ‘facing 20 years of economic woe’

The IMF has warned that Italy faces two decades of stagnant economic growth.

Its latest report on the country puts growth this year at under 1%, down from its previous 1.1% estimate, and forecasts growth in 2017 of about 1% — down from a 1.25% estimate.

The IMF says Italy will not reach pre-crisis levels until 2025, by which time its neighbours will have economies 20-25% above 2008 levels.

Italy is the third largest eurozone country.

It has 11% unemployment and a banking sector in crisis, with government debt second only to that of Greece.

The country's banks are under pressure because the long-standing poor economic performance has depressed tax revenue and increased the chances of businesses getting into difficulty and being unable to maintain their loan payments.

Italian banks are weighed down massive bad debts, and may need a significant injection of funds.

'Surge'

The IMF says any recovery is likely to be prolonged and subject to risks.

Among those risks are the UK's withdrawal from the European Union, which it said last week had prompted it to downgrade its forecasts for growth for the entire eurozone.

Other problem areas include "the refugee surge, and headwinds from the slowdown in global trade".

The IMF said last week that the eurozone was expected to grow by 1.6% this year and 1.4% in 2017. Before the referendum the IMF had predicted growth of 1.7% for both years.

The IMF also revised down its 2018 growth forecast to 1.6% from 1.7%.