Italy: US Tariffs and Slow EU-fund Absorption Weaken Near-term Growth
The full economic impact of tariffs on Italy remains uncertain, however, given the evolving US-EU trade regime and the heterogeneous elasticity of exports, which tends to be lower for patented pharmaceuticals but higher for cars, apparel, drinks and food except in high-priced luxury categories. Italy’s capacity to mitigate the adverse effects from US tariffs will also depend on its ability to diversify and access alternative export and import markets.
Recovery and Resilience Funds Should Support Growth Potential Despite Delays
Given global trade tensions, Italy’s efficient deployment of EU recovery funds becomes even more important for sustaining domestic economic growth. Of the EUR 194.4bn allocated to Italy under the Facility, the country has so far received EUR 122.1bn, equivalent to 63% of the total allocated resources.
However, spending such a substantial sum has proven challenging, with estimated expenditure at EUR 58.6bn in October last year, about 30% of the total allocation according to Confindustria. Most resources to-date have been allocated for tax credits, railway construction and school infrastructure projects.
This article was originally published by a www.fxempire.com
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