There is no obvious way out of the trap holding the Italian economy back, analysts told Business Insider.
Italy has entered a"perma-recession" and there is no obvious way out, analysts told Business Insider.At the same time, Italy's debt-to-GDP load has reached heights not seen since World War II.The scale of such a collapse would be magnitudes greater than the Greek debt crisis of 2015, and thus harder to contain.
Their fear is that because Italy is so much bigger than Greece — and because Italy is one of the Big Three economies underpinning the eurozone — that the scale of such a crisis might be more difficult to contain this time around. "The public debt ratio [to GDP] will probably continue rising and eventually prove unsustainable," Allen said.
"But unlike Italy's, Greece's debt-to-GDP ratio is on a downward trajectory and its debt has been restructured under far more favorable terms than Italy's. Italy's banks hold a high ratio of domestic government debt. If investors believe either the banks or the government cannot sustain that debt, a national default becomes a real risk."This bad equilibrium is very fragile. The main wildcard remains the political environment, as we do not see the government surviving its five-year term. The other wildcard is a financial crisis if markets' confidence in Italy deteriorates quickly.
The quantity and quality of education is too low. Italian 15-year-olds perform below the average tracked by the OECD. Poorly educated workers tend to be less productive.
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