Sick man

23 June 2009 By Rachel Sanderson

It is not just the Italian prime minister s reputation that is withering in the Roman sun. Italy s economy is too. Reform is needed to break a vicious circle of low growth, falling exports and crippling debt. But with Berlusconi otherwise engaged, big change isn t likely.

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The Organisation of Economic Cooperation and Development has cut its forecast for Italian economic growth twice this week. Italy's economy will shrink by 5.5% this year, it said on June 24. It had predicted the Italian economy would shrink by 5.3% in a special report on Italy released on June 17.

It is doubtful whether Italy will return to growth in 2010 and the government should undertake reforms now rather than waiting for the end of the crisis, ECB executive board member Lorenzo Bini Smaghi told Reuters on June 23.

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