OECD says Italian unemployment to reach 11.9% this year

Debt to rise despite drop in deficit

OECD says Italian unemployment to reach 11.9% this year

(see related story on OECD debt forecast) Paris, May 29 - The OECD said Wednesday that it expects unemployment in recession-ravaged Italy to come close to the 12% threshold this year, before rising above it in 2014. It forecast in its economic outlook that unemployment will rise from 10.6% in 2012 to 11.9% in 2013 and 12.5% next year. The OECD recommended that Italy "consolidate reforms that are positive for growth" after former premier Mario Monti's technocrat government introduced a series of structural economic reforms while it was in office from late 2011 to early this year. It also said Premier Enrico Letta's left-right government should "avoid premature tax reductions" after Monti's emergency administration increased them as part of austerity measures to put Italy's public finances in order after the country looked in danger of suffering a Greek-style meltdown in 2011. The outlook said that "despite weak growth and poor prosects for 2013, Italy's deficit will continue to decrease", forecasting a GDP-deficit ratio of 3% this year and 2.3% next. Nevertheless, Italy's huge public debt will keep rising, the OECD predicted, going from 127% of GDP in 2012 to 131.7% in 2013 and 134.3% in 2014. It also sounded the alarm over the credit crunch Italian firms are facing, which makes emerging from the recession even more difficult. "Credit remains expensive and hard to obtain for many companies (in Italy) because... the banks are weakened by growing levels of non-performing loans," the outlook read.

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