"Italy perfectly demonstrates that relative wealth is not forever. The country does not have to experience war, a natural disaster or dictatorial leadership in order to drastically deteriorate the relative standard of living," writes Marcin Lipka, Conotoxia Analyst.
Though it is difficult to believe it now, the GDP per capita expressed in the purchasing power of Italy and Germany in 2002 was practically at the same level and according to the IMF data, it amounted to slightly over 30 thousand USD. The same indicator for Poland two years before its accession to the EU had a value of only 12 thousand USD.
Eurostat data shows that even the poorest region of Italy (Sicily) was wealthier than the richest region of Poland (Mazowieckie province). The fatal economic situation in Italy over the last two decades and the surprisingly good position of Poland has resulted in the fact that, together with other Central European countries, Polish citizens will overtake the Apennine Peninsula.
A waste of the last 20 years
Italy's problems are first and foremost the result of its low productivity. It is the consequence of insufficient investment, years of corruption and a lack of structural reforms. An inefficient and overly generous pension system is being imposed on highly taxed work in Italy. The education system is also catastrophic - young people’s exam results are well below average, as well as the percentage of young people leaving school and not entering into a profession is above the EU average.
After many years, Italians are no longer competing with Germany in welfare statistics, but have become more and more distant from them every year. In 2018, according to the latest IMF estimates, the GDP of Germany will reach 52.9 thousand USD in purchasing power parity. In the case of Italy, it will be 39.5 thousand. By 2023 this difference will increase to over 17 thousand USD. Italians, on the other hand, will slowly give way to Central European countries. First Czechs, then Slovaks and Slovenes, and in the years to follow most likely also Poles.
Italy will soon be poorer than Central Europe
In Poland, the GDP per capita expressed in purchasing power is expected to reach less than 32 thousand USD at the end of 2018 (IMF data). This is still almost 8 thousand less than in Italy. However, the difference in the case of Slovenia, the Czech Republic or Slovakia is much smaller and ranges from 2 to 5 thousand USD.
According to the latest World Economic Outlook prepared by the Fund in October this year, both the Czech Republic and Slovenia will already outperform Italy in 2022. A year later, Slovakia will do it as well. The IMF has no forecasts beyond 2023, but given the trend, Poland will overtake Italy in the next few years.
Moreover, the average GDP expressed in purchasing power parity for Poland is probably higher than for about 30 million Italians. Excluding the north-west of the country (mainly Lombardy and Piedmont) and the northeast (mainly Veneto), the GDP of the rest of the country is about 78% of the average. As a result, south of Bologna, the average GDP per capita of Italy does not exceed the average level for the whole of Poland, i.e. 32 thousand USD.