The economy continues to recover, unemployment and nonperforming loans
have declined somewhat from their crisis peaks, and public debt appears to be
stabilizing. Growth remains moderate, however, despite exceptional monetary
accommodation and fiscal easing, and Italy continues to underperform its euro area
peers, owing to persistent structural weaknesses, imbalances, and financial fragilities.
Thin policy buffers leave the economy exposed, including to the start of withdrawal of
monetary accommodation. Meanwhile, real disposable incomes per capita have fallen
below pre-euro accession levels and the distribution of the burden of adjustment has
been uneven, potentially contributing to public discontent.