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Betting on Italy

Italy has endured more than two decades of slow economic growth and below-potential performance. But two factors now seem to be changing the game: the creation of a credible and effective government and a newfound willingness on the part of the EU to provide robust fiscal support.

MILAN – On September 18, I had the privilege of participating in the National Meeting of the Cavalieri del Lavoro, Italy’s federation of business elites, where 25 entrepreneurs are recognized each year for their leadership, innovation, and contributions to society. The mood was strikingly upbeat.

Optimism about Italy’s economic prospects – ranging from cautious to almost giddy – is not confined to this group. Nor is it difficult to identify what is driving the upbeat sentiment. But it does come at an unusual time. After all, the global economy is struggling not only to recover from the pandemic shock, but also to adapt to a difficult new normal, characterized by climate headwinds, supply-chain congestion, and rising geopolitical tensions.

Coming after more than two decades of slow economic growth and below-potential performance, Italy’s optimism is all the more surprising. But two mutually reinforcing factors now seem to be changing the game: a credible and effective government, led by Prime Minister Mario Draghi, and a newfound willingness by the European Union to provide robust fiscal support for investment. These two are not unrelated.

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