The Recovery and Resilience Facility (RRF) has been a significant policy initiative by the EU, aiming to support post-Covid recovery and accelerate structural transformation through investment and reforms. This article delves into the macroeconomic impact of the RRF on Italy, Spain, and Greece, highlighting the positive effects on GDP, employment, and investment. The analysis is based on a comparison with counterfactual scenarios, considering the average performance of euro area countries with RRF allocations below 1.5% of GDP and a linear extrapolation of pre-Covid economic trends.
The findings reveal a consistent pattern of positive impact on GDP, with even stronger effects on employment and investment. Italy, Spain, and Greece have experienced significant growth in real GDP, labour market performance, and investment rates compared to the control group. Greece stands out with the strongest growth in real GDP and hours worked, while Spain has seen robust employment growth and investment. Italy's performance is notable, given its sluggish pre-Covid growth, with strong investment and capital deepening.
The RRF's contribution to higher potential growth is evident in improved ten-year-ahead projections. However, the analysis also highlights the need for sustained implementation momentum and reform efforts to translate these gains into lasting improvements in productivity and potential output. Future research is required to provide more robust econometric evidence to identify causal effects.
In conclusion, the RRF has had a positive macroeconomic impact on Italy, Spain, and Greece, with varying degrees of strength across countries. The evidence supports the idea that the RRF has helped to strengthen productive capacity, improve labour supply, and enhance total factor productivity. However, ongoing efforts are necessary to ensure the long-term benefits of the RRF's reforms and investments.
