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Wednesday, 13 July 2016 - 16:50
Italy Economy: IMF Says Country Has 'Two Lost Decades' Of Growth
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Italy's economy will not return to the levels seen before the 2008 financial crisis until the mid-2020s, the IMF has said, implying "two lost decades".

By the mid-2020s, it says the economies of other eurozone members will be 20-25% larger than levels seen in 2008.

The Fund's comments came as it cut its growth forecasts for the eurozone's third largest economy.

It now expects Italy's economy to grow by less than 1% this year, compared with an earlier estimate of 1.1%.

The IMF also cut its growth forecast for 2017 to about 1% from 1.25%.

Italy has an unemployment rate of 11% and a banking sector in crisis, with government debt second only to that of Greece.

Italian banks are weighed down by massive bad debts, and may need a significant injection of funds.

The IMF said any recovery in the Italian economy was likely to be "fragile and prolonged", adding that the authorities faced a "monumental challenge".

"The recovery needs to be strengthened to reduce high unemployment faster and buffers need to be built, including by repairing strained bank balance sheets and decisively lowering the very high public debt."

Speaking after the release of the report, Italian Prime Minister Matteo Renzi said that Britain's vote to leave the European Union would add pressure to all countries in the Eurozone.

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