Fabio Panetta: The Italian banking system and the exit from the crisis

Speech by Mr Fabio Panetta, Deputy Governor of the Bank of Italy, at the conference "Unione Bancaria e Basilea 3 - Risk & Supervision 2017", organized by the Italian Banking Association (ABI), Rome, 14 June 2017.

The views expressed in this speech are those of the speaker and not the view of the BIS.

The economic situation and outlook

Growth in the euro area is firming up, driven by the accommodative monetary policy stance and increased international trade. In Italy the recovery has been under way for more than two years and is taking hold. Recently released data from Istat indicate that in the first quarter of this year GDP grew by 0.4 per cent, pushed up by household consumption and firms' inventories. Investment, which had been accelerating strongly since the start of 2016, slowed, but this should only be temporary. Our analyses suggest that firms will expand their production capacity once again in 2017. After the sharp increase at the end of last year, exports are continuing to grow in parallel with world trade.

The recent positive performances are partly unexpected and must be analysed carefully; they will have to be confirmed in the months to come. They are, however, consistent with improvements in the labour market. Although excess labour supply depresses wage growth, the number of people in employment continues to increase, with an acceleration in April, and this despite the termination of the incentives for hiring new employees on permanent contracts.