Will Italy’s Political Crisis Become An Economic One?

Credit: AP Photo/Andrew Medichini

Italy’s political crisis may be having unintended consequences on the country’s economy.

Italy’s national debt is among the most worrying factors affecting the European Union today, and the political situation certainly isn’t helping. The real question is how far the political crisis will affect the Italian economy.

According to financial publication Il Sole 24 Ore, Italy’s political uncertainty will cost the country another 5 billion Euros in the next two years. That extra cost will come in the form of interest on the country’s national debt alone. The problem is that Italy’s public debt is already overwhelming at 2.3 trillion Euros. This accounts for 134% of Italy’s GDP, making their public debt crisis considerably worse than the one in the US. Italy’s debt is now the second largest in the Eurozone, proportionally to GDP, after Greece’s. To make matters worse, the Italian economy has slowed down. The first quarter of 2019 saw growth, but the second quarter saw the Italian economy stagnate.

There are currently no easy solutions to Italy’s economic woes. Some politicians in the troubled Mediterranean economy are promoting austerity measures, while others are promoting shock stimulus packages. Even the country’s far-right is promoting a 50 billion Euro fiscal stimulus package to “shock” the economy back to productivity. Now that Prime Minister Giuseppe Conte has resigned, it’ll be up to the leaders of all of Italy’s political parties to chart a course going forward.

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