Economic Survey of Italy 2009: “Italy is facing a difficult period. The economy is in a sharp recession, mainly because of external developments linked to the global financial crisis, and there is great uncertainty about the strength and timing of the recovery. Despite a relatively healthy banking system Italy seems particularly sensitive to both the credit tightening which has occurred in line with that in other countries and the weakness in external demand. This sensitivity has probably been accentuated both by the poor productivity and aggregate profitability performance of the economy over the past decade or more, and by the weak underlying fiscal situation. An array of budget neutral measures have been taken in the short term, but economic performance can be enhanced over the longer term by both macroeconomic and structural policy reforms.”