“This is the third year in a row that Italy has negative growth and clearly we have a long-term problem here in Italy,” Anatoli Annenkov, Senior European Economist at Societe Generale, told CNBC.
“The labor market laws are one step in the right direction but we think much more is needed, unfortunately. We need much higher nominal growth in Italy to make sure the debt in Italy is sustainable or alternatively, tighter fiscal policy,” he told CNBC.
As protests took place back home on Friday, Renzi told a meeting of entrepreneurs in Istanbul that if Italy postponed much needed reforms, “we condemn ourselves to a slow decline,” the Italian ANSA news agency reported.
Italy’s economy is still mired in recession although Economy Minister Pier Carlo Padoan said in November that he believed the country would see “positive growth” in 2015. In the meantime, the euro zone’s third largest economy has seen its debt pile grow to become the second highest in the 18-country region, behind Greece, with a debt to GDP ratio of almost 134 percent.
Like other countries in the euro zone, such as Portugal, Ireland, France and Greece, Italy had been called on to implement far-reaching structural reforms in order to enable its economy to recover. Countries like Ireland and Portugal that had enacted reforms, had improved, Annenkov said.