20 Settembre 2012
At the weekly cabinet meeting today, the Italian government has updated its growth and budgetary projections for 2012-2015 (update of the Economic and Financial Document – DEF – of 18 April 2012). Owing to a deterioration in the international environment, in particular the euro area crisis, the Italian economy is expected to contract 2.4% of GDP this year before picking up again at the beginning of 2013. Due the usual carry over effects, the growth forecast for next year is flat overall (-0.2%). In 2014-2015, however, activity is expected to grow by 1.1% and 1.3% respectively as demand increases both domestically and internationally and the positive effects of a balanced budget, a decreasing debt and structural reforms permeate throughout the economy.
Despite the adverse external outlook, the situation of the public accounts improved in the first eight months, with the cumulated cash borrowing requirements of the State sector decreasing by €13.6 billion to €33.5 billion. This was thanks to a reduction in spending and an increase in receipts, although, in the latter case, more modest than expected. Unfortunately, borrowing costs also increased over the period due to concerns about the euro area, which appear to have been dispelled recently.
Under unchanged policies, the general government position this year is estimated at -0.9% in structural terms, a full 2.8 percentage points fall from 2011. In 2013, Italy is forecast to reach a small structural surplus of 0.2% of GDP. This re-affirms the government’s commitment to a structural balance next year despite the impact on public accounts of the May earthquake in the northern regions of Emilia-Romagna, Veneto and Lombardy. It is reminded that in line with the EU Stability Treaty (Fiscal Compact) “the annual structural balance of the general government is at (…) medium-term objective (…) with a lower limit of a structural deficit of 0,5 % of GDP at market prices”. The equivalent nominal figures for 2012 and 2013 are -2.6% and -1.6% respectively
With the recovery and programmed dismissals of public participations and properties - the proceeds of which estimated at 1 percentage point of GDP a year - the public debt is forecast to decrease to 122.3% in 2013, 119.3% in 2014 and 116.1% in 2015 from 123.3% this year. This is net of the financial support to euro area countries in need.
The combined effect of sound public finances and reforms in Italy, on the one hand, and of the stabilization of the euro area, on the other hand, will allow the Italian economy to rebound rapidly as the financial situation of companies and households remains sound and the excellence of Italy’s products continues to perform very well.
For more information see two-page summary of the updated DEF and the DEF document itself at: http://www.governo.it/
