Italy’s Matteo Renzi hails growth before Sunday’s vote

Days before a referendum that could decide his political future, Prime Minister Matteo Renzi got the latest indications of Italy’s economic health.

With growth up and joblessness declining, the report card turned out to be a promising one. The eurozone’s third-biggest economy expanded 0.3% in the third quarter, while a separate report showed manufacturing unexpectedly accelerated last month.

Italy also revised up second-quarter GDP growth from stagnation, and unemployment fell slightly to 11.6% in October. The jobless rate peaked at 13.1% in 2014.

A separate survey showed Italian manufacturing expanded last month. “The pace of the economic recovery, which remains subdued, and the outlook for the labour market oddly enough weren’t main themes in the referendum campaign,” said Paolo Pizzoli, a senior economist at ING Bank in Milan said before the latest reports were released.

“Those challenges will still be there after the vote.”

“Italy’s growth reaches 1%,” Mr Renzi said in a post on Twitter after the release. “If the country unlocks itself, we will do more,” he added in a reference to the choice Italians now face with the weekend referendum.

The new numbers might influence undecided voters heading to the polls on Sunday or reject reforms that Mr Renzi says are needed to move the country forward. The figures also provide a report card on his almost three-year-old economic strategy. During the period, he’s tried to contain the country’s huge public debt, of €2.21 trillion.

It has exceeded 130% of GDP during his tenure and is expected to increase again at the end of 2016. To boost growth, Mr Renzi passed in his first months in power a personal-income tax rebate for low-paid employees and then temporary discounts on social contributions for employers hiring workers.

Mr Renzi said this week the government made a deal with state-employee unions on a long-awaited salaries’ rise. Wages were frozen in 2010 under a measure approved by then-prime minister Silvio Berlusconi.

A euro volatility measure yesterday rose to the highest since before the Brexit vote, as investors braced for the referendum in Italy and Austria’s election for president, also on December 4, as well as the ECB’s policy decision next week. 


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