Ignazio Visco: Italy's economic and banking conditions, and challenges ahead

Speech by Mr Ignazio Visco, Governor of the Bank of Italy, at the Annual Meeting of the Italian Banking Association (ABI), Rome, 10 July 2018.

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

Cyclical conditions and the economic outlook

In Italy, as in the other main advanced economies, economic activity slowed in the early months of 2018, with the signs of deceleration continuing in the spring. The confidence of households and firms has nonetheless remained high, with positive indications also coming from the expansion of bank lending and improvements in the labour market. Although unemployment is still above 10 per cent, employment has surpassed the peaks observed prior to the double-dip recession. In more recent months, both the fixed-term and, to a lesser extent, permanent components have recorded increases.

In most of the forecasts made by national and international institutions, Italy’s growth is expected to exceed 1 per cent on average in the three years 2018–20. This scenario assumes monetary policy will continue to be accommodative and financial conditions relaxed, and that there will be a favourable economic environment worldwide. In recent months, however, there has been a notable increase in the risks connected with the United States’ protectionist policies disagreements on various fronts in relations between EU countries.