Economists warn Italy's economy could be like Greece due to banking crisis

Rome/Brussels : European economists and analysts have claimed that as the Italian banking sector is overburdened with a debt of 350 billion, the Italian economy could also tumble down like that of Greece. The Italian economy is the 3^rd largest economy in the ‘Eurozone’. The instability of this economy may lead to uncertainty in the entire Eurozone, leading to the dungeon of economic insecurity. The Eurozone is still trying to come out of the threat caused by the unsteadiness of the Greece economy.

On Tuesday the European court presented a verdict on a banking case from Slovenia. According to this judgement it is important for the private sector to share the load, so that the banking sector is pulled out from the losses. This verdict is seen as a setback not only for Italy, but for the rest of the European countries too. This judgement does not allow any country to use the tax payer’s money to revive banks in debt.

This judgement has intensified the difficulties for Italian banks, its economy and government. As a result of the judgement the European banks and the Italian government cannot carry out the ‘Bail out’, procedure which would have helped to revive their banking sector. The question also arises on the possibility of the support that is expected from the European central bank and the IMF, as they have already helped Greece with 200 billion Euros during its recent economic instability.

Italy is about to use the emergency fund to pull out its banking sector from the current critical situation. The Italian government has hired a professional agency from the US to ensure the same. This decision is been opposed by the European Union, as it does not fall under the rules laid down by the union. Meanwhile the IMF has published a report that depicts depletion in revenue.

According to that report, if the Italian economy wishes to attain the state of harmony that it had in the year 2008, then it will have to wait until the decade of 2020-30.This indicates that the Italian economy may not be progressive at least for a decade from now. This clearly means that Italy will not get huge investments from investors, which in turn would be the biggest setback for it.

The debt share of the Italian banks is 20% more than its country’s GDP. Other than this the Italian economy is under a debt of 133% against its GDP. The unemployment rate in Italy has reached a mark of 11%. All these factors clear indicate that Italy is walking on the footsteps of Greece.

The Italian Prime Minister Mr. Matteo Rinzi has held the Former Chief of the central bank Mr. Mario Draghi, responsible for the current economic threat faced by the Italian banks. He further said that currently Mr. Draghi is heading the European central bank and thus he should help Italy to emerge from this situation. But post the Brexit and the Greece incident, it seems that Mr. Draghi has some limitations in helping out Italy. Most importantly analyst are reporting that the Italian economic ’peril’ could be more fatal and severe than that of Brexit for Eurozone.