(ANSA) – ROME, AUG 1 – The IMF on Monday praised the way Italy responded to the economic challenges presented by the COVID-19 pandemic while stressing the need for more structural reforms.
"The Italian economy rebounded vigorously from the COVID-related drop in output and has avoided economic scarring," the IMF said in the report on its Article IV Consultation with Italy.
"Employment and labor force participation have fully recovered, and banks' nonperforming loans have continued to decline and their capital positions have strengthened.
"Nevertheless, the economy is now facing major new challenges.
"The war in Ukraine and COVID-related disruptions to global supply chains have pushed up energy prices and inflation more broadly and intensified shortages of key products, even as global demand is slowing.
"Ensuring an adequate supply of energy is a priority. A severe drought across the Northern part of the country will further pressure food prices and exacerbate energy security challenges.
"Yields on Italian government bond have risen and spreads have widened on the prospective tightening of monetary policies and political uncertainty amid a weakened global outlook.
"Reinvigorating trend growth is essential to strengthen public finances in order to meet social, climate and other goals, while also moderating the high level of public debt".
The report welcomed Rome's commitment to the National Recovery and Resilience Plan (NRRP) and commended the timely implementation of Next Generation EU-related targets and milestones.
It recommended continued steadfast progress to lift labor productivity, investment, and potential growth, as well as accelerate the green transition. (ANSA).
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