Two decades of stagnant productivity and near-zero growth

Opening a January 2017 conference held in memory of economist Riccardo Faini, Bank of Italy Governor Ignazio Visco examined what the conference's own title bluntly called 'Italy's lost productivity,' framing weak productivity growth as the central structural weakness underlying Italy's broader economic stagnation since around 2000. Visco argued that the reform efforts initiated in 2011, during the depths of the eurozone sovereign-debt crisis, needed to be continued and deepened rather than treated as a completed response, since the underlying drivers of Italy's weak output growth, including an aging population, a fragmented firm structure dominated by small and often family-run businesses, and comparatively low investment in skills and innovation, remained largely unaddressed. In later remarks, including a September 2020 speech on growth and the role of knowledge, Visco returned to the same theme, describing how during the most acute phase of the sovereign-debt crisis the Bank of Italy's attention had been consumed by sovereign bond spreads, fiscal deficits and non-performing loans rather than the longer-run productivity agenda. This combination of crisis firefighting and unresolved structural weakness left Italian per-capita GDP by the late 2010s only marginally above its level at the turn of the century.