Youth unemployment hit a 33-year high in June, according to the latest data from the Italian national statistics office, signaling the troubled country and the wider eurozone area could be on the verge of economic collapse.
It’s the disappointing unemployment rate that indicates the economic collapse would be imminent. Many economists had expected that the unemployment rate would fall to 12.3%. But it turns out that the unemployment rate rose from 12.5% to 12.7% while less jobs were created.
Italy’s jobless rate, which currently stands at 12.5%, has nearly doubled since the financial crisis in 2008. Unemployment in Italy remains higher than that of the eurozone; remaining unchanged at 11.1% in June.
On Monday July 27th, the International Monetary Fund (IMF) noted that “without a significant acceleration of the growth rate, it will take Italy almost 20 years to reduce the unemployment rate to pre-crisis levels.”
The third-largest economy in the region has been suffering from the high unemployment. Youth have been even harder hit; with 44.2% of those between the ages of 15 and 25 unemployed.
Overall, the eurozone’s economy has slowed down significantly which forced the European Central Bank (ECB) to begin printing money and lowering the interest rate. Despite such massive money printing from the ECB, the situation in Italy is just worsening in the extent that the country has not been able to benefit from the ECB’s money printing program.
It’s not only about the unemployment rate. Massive public debt is driving Italy into turmoil. It is repeatedly mentioned that Italy’s debt holds more than 130% of the country’s gross domestic product (GDP), and still rising. Under such circumstances, with huge debt and high unemployment, policymakers in Italy and even in Europe have not been able to find the solution to save an economy on the verge of collapse.
As it stands, uncertainties surrounding Greece along with an emerging crisis from Italy and perhaps later from Spain may drag the entire eurozone (and eventually the world) into a recession in early 2016.