The Moody's rating agency said
Monday that it expects Italy's gross domestic product to drop
0.1% in 2014, revising down its previous prediction of growth of
0.5%.
The agency said Italy would not hit its target
deficit-to-GDP ratio this year of 2.7% after the country
returned to recession, adding that there were "significant
risks" of the deficit getting even worse.
Premier Matteo Renzi promised that Italy will not breach
the EU's deficit threshold of 3% of GDP after Italy slipped into
its third recession in five years.
In an interview published in the Financial Times on Monday,
he had already admitted the deficit will not drop to 2.7% this
year, saying it will be 2.9%.
"I have absolutely no intention of breaking the 3%
ceiling," Renzi told the FT.
"We hope to have better [growth] figures in the second half
and as a result will be at 2.9 per cent [of GDP]".
Last week national statistics agency Istat said Italy was
officially back in recession, as GDP dropped 0.2% in the second
quarter after shrinking 0.1% in the first three months of the
year.
This means that the government's forecast of 0.8% growth
this year - the basis for its budget calculations - is set to be
off the mark.
Moody's added that the growth outlook would "complicate the
passage and the completion of the agenda of structural reforms
of the Renzi government".
It added that: "the slowness in proceeding with reforms
suggests that the government's popularity has not translated
into a political drive for... a whole of broader reforms".
It said comments by spending review chief Carlo Cottarellis
suggested that Italy has trouble "making permanent spending
reductions in the face of political pressure".
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