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Southern Italy recovered in 2015 after seven years of decline

by Carmine Fotina

24 Exclusive content for IT24

One year ago, the Svimez report forecast a “Greece-like” scenario for southern Italy, sparking a new long debate last summer about the problems of the South, or Mezzogiorno. One year later, the non-profit association said the southern Italian economy is close to a turning point, after returning to growth in 2015 after seven years of consecutive decline and a combined loss of 13 points of GDP.

But caution is advisable. Extraordinary factors could have played an important role: the favorable harvest, tourism benefiting of diversified flows because of geopolitical risks, and especially accelerated public spending due to the end of the EU fund program for 2007-2013.

2015 and the outlook

Founded in 1946 to promote the industrialization of southern Italy, Svimez highlighted some positive signs, with President Adriano Giannola speaking of “a possible turning point.” GDP increased 1% in 2015, against 0.7% in the Center and the North, and compared to 0.8% nationally. For the first time after eight years, consumption (+0.3%) and investment (+0.8%) slightly accelerated. Small changes have been seen across all sectors. A 1.9% growth in manufacturing is largely the result of automotive and FCA’s investment – as shown in the Basilicata region. But, according to Svimez, the chemical and textile sectors also showed signs of recovery.

The extraordinary nature of 2015 is confirmed by the forecasts for 2016, when the performance in central and southern Italy (up 0.3%) is expected to be more contained than in the North (0.9%) and nationwide (0.8%). In 2017, Svimez forecasts 0.9% growth in the South, against respectively 1.1% and 1% in the North and at a national level.

The social landscape

The number of employees in southern Italy has increased by 94,000 in 2016 (up 1.6%), against 91,000 in northern Italy (up 0.6%). But the crisis has profoundly hit the South, with nearly 500,000 jobs lost compared to 2008. The social context remains a concern: in the past year, people in absolute poverty increased by 218,000 and the risk of falling into poverty in the South is three times as higher as in the rest of the country.

The proposals and the government

The 2015 figures are not enough to close a huge gap, with growth of only 1.3% in the past 20 years, nearly 40 points lower than in the European Union.

Based on the experience of other European countries, like Poland, Svimez proposed to use an instrument to attract investment, like the special economic zones.

Visible acceleration, equal to an additional 0.8%, could come from spending in 2016 all €7 billion of investment available for the South thanks to the flexibility clause agreed with the EU. But additional investment must be effective, not only aimed at spending EU funds within the deadline.

Svimez has called on the government to complete the implementation of the Masterplan. “The pacts with two fundamental regions, Puglia and Sicily, are missing,” it said.

Undersecretary Claudio De Vincenti noted the government has already put €13.4 billion in the pact.

“By mid-August, we will approve €11.4 billion for infrastructures in the South and €4.6 billion for central and northern Italy,” he said.