News Analysis: Comparisons of Italian, Greek economies can be misleading

ROME (Xinhua) - Both with a mammoth debt load, a slow growing economy and stubbornly high unemployment rates, it may be misleading to draw a parallel between Italy and Greece, which is fighting for its life as part of the euro zone.

Analysts say a comparison between the Italian and Greek economies is unfair, at least for now, but Italy needs to make efforts to avoid a fate like that of Greece.

Earlier this week, Italian Finance Minister Pier Carlo Padoan called the parallel "out of place". "Italy has significantly strengthened its position... Italy is gaining a lot of confidence in the markets," Padoan said at the Ambrosetti Conference in northern Italy.

Analysts agreed - up to a point.

"Keep in mind that Padoan is a great motivator and so he is expected to say things like that," Pietro Paganini, from the think tank Competere, told Xinhua. "There are some positive indicators in Italy and some negative indicators. I do think Italy has a very, very long way from having the kinds of problems Greece is having. But it does not mean government officials can relax."

Paganini and other analysts said that the biggest benefits the Italian economy has...are weak fuel prices and a weak euro, which aids the export and tourism sectors.

Greece has the same benefits, obviously, but, as Carlo Filippini, a political economics expert with Bocconi University in Milan, said, "It is much later in the game for Greece; they need more than that" in order to recover.

Greece's national debt is around 180 percent of its gross domestic product (GDP), compared to about 135 percent for Italy. Some media have noted that Greece's official debt level was below 130 percent of the GDP at the start of the economic crisis in 2009, below Italy's current level. But Greece's budget deficit at that time was nearly double Italy's current deficit level, and in any case analysts say it's a mistake to make comparisons based entirely on macroeconomic figures.

For his part, Paganini scoffed at comparisons between the situations in the two southern European countries.

"Italy's industrial ecosystem is strong, much stronger than the one in Greece," he said, "Italy has plenty of industrial production, despite the economic crisis, and they are starting to export."

Javier Noriega, chief economist with Hildebrandt and Ferrar, agreed: "These are difficult times for Italy, but nothing like what the Greeks are experiencing," "People there are hoarding cash, banks are on the brink, tax revenue is dropping. None of that is happening here (in Italy),"  Noriega said in an interview.

Analysts describe Prime Minister Renzi's reform efforts as a source of strength for Italy, including, above all, the so-called Jobs Act that brings new flexibility to labor markets. But they say it's still a job only partially completed.

Filippini, who attended the Ambrosetti Conference where Padoan spoke, told Xinhua that cuts to government spending so far are "too timid." He said deeper reductions must be made, followed by tax cuts.

"What has happened so far is positive, but it's too little," Filippini said, "More has to be done to spark growth."

According to Paganini, the biggest risk to Italy's efforts to avoid a fate like Greece's is complacency.

"Italy has some good fortune right now, with low oil prices and a weak currency," he said, "If these trends continue, there is a risk that Italy could step back from reforms and let these external factors drive the recovery. That would be a big mistake, and if that happens, things could start to slip backwards," he added.