Italy is the next country “to watch”

Mr. Francesco Garzarelli, Co-Head Macro and Market Research at Goldman Sachs, interviewed by Bloomberg Television “On the Move”, discusses reform in Italy coming from the new Mr. Matteo Renzi Government and his outlook for economies worldwide.

Italy has taken the decision to discontinue the Government to better face the challenges of the 2014.

Bloomberg TV interviewed Mr. Francesco Garzarelli, Co-Head Macro and Market Research at Goldman Sachs, and touched on two main subjects:

• The deep reform of the State in several directions should be taken at high speed in order to simultaneously improve the Country’s financial position and to take advantage of the new economy development cycle, which is still quite low
• The EEC Presidency in the second quarter of 2014

Mr. Francesco Garzarelli is the man who had predicted, one year ago, that Spain should be the Country to watch in 2013.

In the interview many subjects are touched upon, including the

Francesco Garzarelli, Goldman Sachs

Euro/Dollar exchange rate; the role and the guidelines of Central European Bank and its President, Mario Draghi; the outlook for economies like Japan, Canada and UK compared to USA.

In the first few minutes Italy is the main subject.

Mr. Garzarelli confirmed the expectation that the new Prime Minister, Mr. Matteo Renzi, age 39, will be able to affect a strong acceleration to the global reform of the Italian state, starting with the most urgent points:

• Election Law and Country Governance
• Simplification of the administrative organization
• Strong simplification of rules and procedures in the way to do business in Italy. This has had a negative impact on the foreign investment availability
• Significant reduction of public expenditure, through optimization of procedures and roles instead of “linear cuts”

And, most important of all, the “Labour Act”, whose draft is already available in the Government website, with the purpose to change the labour tax and improve the labour cost figures with respect to European Countries.

This will be the main stimulation to find again a growth in all economy segments and will have a side positive effect in improving the credit availability from Banks to Industry as well.

Goldman Sachs takes a positive attitude in looking at the credibility of the Italian Government and spends a “trust voucher” for it. One year ago Goldman Sachs made a correct prediction identifying Spain before Italy as “the Country to watch”. Now Italy is working hard and fast to confirm the same role assigned to Her for 2014.