ISTAT: Italy's Economy Lags Behind Spain, Needs Investment and Labour Reforms
ISTAT Annual Report Highlights: Italy vs Spain
By Antonella Cinelli
ROME, May 21 (Reuters) - Italy's economy will grow by less than 1% this year for a fourth year running, national statistics bureau ISTAT said on Thursday, suggesting ways the country could learn from Spain's far more successful performance.
Following a post-COVID 19 rebound, Italy saw growth of just 2.3% in three years from 2023-2025, roughly a quarter of the 9% expansion recorded by Spain in the same period, ISTAT said in its annual report.
The statistics bureau drew a stark comparison between the immigration and investment policies in the euro zone's third-largest economy, and the more effective ones adopted in Spain, which is fast closing the gap as the fourth-largest.
Among the factors holding back Italy's growth are a long-standing demographic crisis and a short-sighted approach to investment, not sufficiently focused on technology, ISTAT said.
Labour Market Challenges
Italy Labour Market Participation Lowest in EU
ITALY LABOUR MARKET PARTICIPATION LOWEST IN EU
In Italy last year a third of people aged 15–64 were neither working nor looking for work, the highest rate in the European Union.
Italy's 66.7% of people actively engaged in the labour market, known as the "participation rate", compared with an EU average of 75.7%.
Demographic Crisis and Labour Force Decline
Although Italy's labour market participation has increased in recent years, "even if it were to remain at 2025 levels, the decline in the population alone would mean that by 2050 the number of people in work aged between 15 and 64 would fall by more than five million people," ISTAT researcher Cristina Freguja said in presenting the report.
To counter the effects of population decline, it is necessary to significantly increase participation rates in the labour market, the report suggested, a path that Spain has embarked upon by focusing on immigration.
In 2022-2025 the Italian population aged between 15 and 64 rose just 1.6%, versus 4.6% growth in Spain, where expansion was driven by a 22.3% rise of foreign residents. They increased by only 4.6% in Italy.
Investment Trends
Italy Investing in the Wrong Things
ITALY INVESTING IN THE WRONG THINGS
The better performance of the Spanish economy also reflects its greater focus on more technologically advanced sectors, particularly in services, the report said.
Last year Spain recorded a 16.1% growth of investment compared to 2022, versus a 10.4% rise in Italy.
Most importantly, Spain saw strong growth in investments related to intellectual property, up 23.7%.
That compared with a 7.8% increase in Italy, where investment was heavily concentrated in the construction sector (+14.7%), which has a smaller impact on long-term productivity.
Technology and Workforce Shortcomings
In Italy, investment in technology accounted for 19% of total investment last year, below the EU average, ISTAT statistician Stefano Menghinello said.
Moreover, Rome last year ranked fourth from the bottom in the 27-nation bloc in terms of people employed in scientific and technological professions, accounting for less than a third of the workforce, compared with an EU average of 38.3%.
(Reporting by Antonella Cinelli, editing by Gavin Jones and Alvise Armellini)
