Until the final quarter of 2013, the Italian
economy had shrunk for nine consecutive, and the economy is smaller than it was
14 years ago, and unemployment is near 13 percent. In the final quarter of
2013, the Italian economy grew by 0.3% and this was considered a great
improvement, and the overall consumer confidence for the next year is the
highest since 2002. There was a new consumer confidence survey given in April
and 44.2% of the respondents expected the economy to be good a year from now.
This is the highest level of optimism since 1996.
There is currently a
government proposal to raise domestic demand and increase jobs. Prime Minster
Matteo Renzi also wants to reduce income taxes while raising taxes on income
from financial instruments. However, the main reason for this confidence, is
that the euro zone crisis has seemed to ease, and the Italian stock market has
gone up 25% in the last year. The
consumer confidence survey also shows that although the unemployment rate is
high and the economic growth (GDP) is stagnant, both figures are expected rise
within the next year, as well as a decrease in government borrowing costs.
This article relates to our study
of GDP. For example, the expectation of unemployment would increase the
consumption aspect of GDP, because as more people are employed and have an
income, they will be willing to spend more and buy items. This will increase
consumption. In addition a decrease of government spending will also increase
the GDP, by increasing the government aspect. If the government borrows less
money, and if it makes more money from taxing financial instruments rather than
normal income taxes, this will raise the government aspect (less borrowing), as
well as the consumption aspect (the decrease on income taxes will lead to more
consumption).
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