Italy’s Economy Continues to Be Plagued by Spare Capacity

(Bloomberg) --

Italy’s problems started long before populist governments came to power in Rome as the country never fully recovered from the disastrous euro crisis. Its output gap widened to 5.1% in the second quarter of 2014 and has only narrowed to 1.6% -- that’s larger than any other of the monetary union’s four largest economies. Bloomberg Economics predicts that sluggish growth will leave Italy with an output gap of about 1.5% of potential GDP at the end of 2019.

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