AFTER three years of recession, Italy’s economy actually grew in the first three months of the year, by 0.3% compared with the previous quarter. It is forecast to grow by 0.7% over the year as a whole, boosted by a weak euro, cheap oil, the European Central Bank’s bond-buying programme and a reform-minded government. That looks good compared with the country’s grim recent record: between 2001 and 2013 GDP shrank by 0.2%.
National economic data always mask regional differences. In Italy, however, they disguise a divide that is deeper than normal (see charts). The country is, in effect, made up of two economies. Take that 2001-13 stagnation. In that period northern and central Italy grew by a slightly less miserable 2%. The economy of the south, meanwhile, atrophied by 7%.
This is partly because the south grew more slowly than the north before the financial crisis. But the main source of the divergence has been the south’s disastrous performance since then: its economy contracted almost twice as fast as the north’s in 2008-13—by 13% compared with 7%. The mezzogiorno—eight southern regions...Continue reading
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