As one of the seven industrialized countries in the west, why did Italy's economy decline first?

All this may be because Italy's economic situation is not good, and its economy is accelerating into a state of contraction. In the fourth quarter of 20 18, Italy's gross domestic product (GDP) decreased by 0.2% month-on-month, which was the second consecutive quarter of decline, that is, it officially entered a technical recession, becoming the first EU economy to enter a recession since 20 13.

While the economic growth rate continues to decline, Italy is also facing a huge debt default risk, and the debt scale is second only to Greece in the euro zone. According to official Italian data, the Italian government debt in 20 17 was 2.3 trillion euros, accounting for 13 1.2% of the GDP, which was not only higher than the 60% standard set by the EU, but also exceeded the 90% public debt warning line of developed countries.

Obviously, there are serious problems in the Italian economy, and there is a risk of large-scale economic recession at any time. For Italy, seeking economic cooperation with foreign countries may be the only way to save the economy at present, so it is not difficult to understand the signal of economic cooperation with China.

I believe many people will find that the economic situation in Italy is familiar, as if it was Greece that triggered the European debt crisis that year. However, compared with Greece, Italy's economic strength is obviously much stronger. Italy is not only one of the seven industrialized countries in the west, but also the fourth largest economy in Europe and the ninth largest economy in the world. It stands to reason that Italy should have a strong ability to resist economic recession and repay debt risks, so why did Italy fall into today's predicament?

This result may be related to the organizational form of Italian enterprises. Small and medium-sized enterprises in Italy are very developed, accounting for more than 99.8% of the total number of enterprises. Italy was once known as the "kingdom of small and medium-sized enterprises", and most of the business models were family-centered. According to the European Commission's SME tracking report, 95% of Italian enterprises have less than 10 employees.

Due to small scale and family management, Italian enterprises have shortcomings in management, which makes it difficult to compare with foreign mature large enterprises. In the same industry, large enterprises often invest more in R&D and innovation, manufacturing, modernization and upgrading, and can take advantage of economies of scale, and the overall production efficiency is much higher than that of Italian enterprises. Previously, OECD data showed that the labor productivity level of Italian enterprises was lower than that of foreign counterparts.

In addition, Italy's labor productivity improved slowly, and even showed a downward trend. The data shows that from 1995 to 20 15, Italy's labor productivity increased by 0.3% annually, while the average annual growth rate of the EU reached 1.6%. Among them, Italy's labor productivity decreased by 0.3% in 20 15 years.

This result may be related to the local culture that hates job competition. In Italy, it is very common for young people not to study or find jobs. According to the data released by the Court of Audit of the European Union, by the end of 20 16, the total number of Neanderthals under the age of 30 in Italy (especially those who don't study, get employed, take part in employment training and do nothing all day) reached 2.2 million, accounting for 24.3% of the total number of young people, the highest in Europe, while the average level in the European Union was 14.2%, while that in Germany was only 8.

It must be said that the form of small and medium-sized enterprises and inefficient labor production have restricted Italy's economic development. According to the data, all kinds of medium-tech products in Italy occupy a considerable share in the world market, but there are relatively few high-tech products. With the development of economic globalization and the continuous progress of science and technology, more and more countries are moving towards industrial modernization and scale, which brings great competitive pressure to many industries with low technical barriers in Italy.

In the past, when labor productivity was low, Italy could maintain its export competitiveness by devaluing its currency. But after joining the euro zone, this "magic weapon" of Italy completely failed. As the single currency euro is used, the trade between EU member countries can only use the euro, and Italy can no longer use the devaluation of the lira to gain export advantages, which completely exposes the economic weakness of Italy's low labor productivity and reduces its economic vitality.

The data shows that from 2000 to 20 17, the Italian economy grew at an average annual rate of 0. 15%, which was close to "zero growth", and was at the bottom of the euro zone countries, in sharp contrast to its average annual growth of 4.8% in the 1960s and 1970s and 2% in the 1980s and 1990s.

Generally speaking, during the period of 17, Italy's GDP increased by 2.6 percentage points, far behind other economies in the euro zone, especially France, Germany and Spain, which increased by 2 1.7 percentage points, 23.7 percentage points and 3 1.3 percentage points respectively.

In addition to the influence of euro unification, the inefficiency of government and public services is also a major reason for dragging down the Italian economy. In the global economic freedom index, Italy ranks 64th in the world, 29th in Europe, and 1 in the euro zone.

According to the World Justice Project, Italy's civil justice system ranks second to last among 35 high-income countries. According to the data released by the European Union Judicial Efficiency Committee, it takes an average of nearly 3,000 days for Italy to wait for the final result of each legal lawsuit, while Switzerland, with the highest judicial efficiency, only needs about 400 days, and the average level of European countries only needs about 600 days.

Such low judicial efficiency has obviously had a negative impact on the Italian economy. Earlier, the International Monetary Fund (IMF) research showed that if the time for resolving labor disputes is reduced by half, employment opportunities will increase by about 8%, credit costs will be reduced, and investment will be attracted.

With the deterioration of the economic environment, the employment problem in Italy is becoming more and more serious. According to Eurostat data, the employment rate of Italian graduates has been deteriorating, from the highest point of 66.2% in 2006 to below 50% in 20 13, and has been below 50% in recent years. In contrast, the employment rate of graduates in Spain is 65%, that in France is 72%, and that in Germany is 90%.

A previous survey by the European Commission showed that the biggest concern of Italian voters was the soaring unemployment rate. Earlier, local media reported that in 20 17, Italian banks announced the recruitment of 30 junior employees, and as a result, they received more than 80,000 applications.

Facing the pressure of economic growth and the serious employment problem, the Italian government has never found an effective solution, but has maintained high welfare social expenditure for a long time. Italy is a high welfare country. In 20 17, social welfare expenditure accounted for 20% of GDP, much higher than other European countries.

After the current government came to power, Italy's attitude towards the original welfare policy remained unchanged in its ruling plan. It is worth mentioning that the Italian budget for 20 19 submitted to the European Commission shows that the fiscal deficit accounts for 2.4% of GDP, much higher than that of deficit ratio, and it was 2. 1% in 20 17. After being opposed by the European Union, it was forced to drop to 2.04%.

The weak economy makes Italy's fiscal revenue grow slowly, and excessive welfare expenditure leads to excessive fiscal expenditure, which intensifies the debt pressure of the Italian government, which is also the reason for the serious debt problem of the Italian government mentioned at the beginning.

At present, the capital market has almost lost confidence in Italy's economic growth and is always worried about falling into economic recession. In this case, the Italian government can only find ways to stimulate economic growth by itself, and loose monetary policy seems to be the only way for Italy. However, due to its status as a euro zone country, Italy has no independent monetary decision-making power, and can neither implement a loose monetary policy nor adopt a proactive fiscal policy.

For Italy, saving the economic recovery seems to have entered a "dead end". But fortunately, God never shuts one door but he opens another. With a brainwave, Italy turned its attention to China, which is expanding its foreign investment and opening up. According to the data, China is Italy's largest trading partner in Asia and the third largest source of Italian imports. In 20 18, the bilateral trade volume between China and Italy exceeded US$ 50 billion, up 9. 1% year-on-year.

The economies of China and Italy are highly complementary and there is still great potential for cooperation. For example, there is a lot of room for cooperation in the fields of finance, health, art and tourism, and there are many intersections of interests. Through this cooperation, the Italian economy will usher in new growth opportunities, and it remains to be seen whether Italy can make good use of this important opportunity to achieve economic revival.