Italy’s debt sustainability: stable but with room for improvement through more growth

Italy has the highest debt-to-GDP ratio of all euro area countries aside from Greece. Thanks to historically low interest rates and above-average economic growth, in 2018 its debt ratio is set to decrease significantly for the first time in ten years. On the one hand, simulations of several scenarios demonstrate that there are currently no immediate doubts about the debt sustainability of the Italian state. On the other hand, no significant reduction in the debt ratio is currently to be expected and there are risks that could hamper the necessary debt cuts. For policymakers, the most important starting point lies in reforms that drive growth, tackle the structural problems of the Italian economy and help to overcome its chronic growth weakness.

Italy’s debt sustainability: stable but with room for improvement through more growth(PDF, 118 KB, non-accessible)