The International Monetary Fund
said Monday that it revised down its GDP growth forecast
for Italy for 2019 to 0.6%, down from the 1% it predicted in
October - in line with a similar reduction in forecast by the
Bank of Italy last week.
The IMF kept its forecast of 0.9% growth for 2020, it said in
a statement.
"We have revised downwards our forecasts for advanced
economies slightly, mainly due to downward revisions for the
euro area," the IMF said.
The IMF said that Italy's financial situation was among the
main risk factors for the global economy.
"In Europe the Brexit cliffhanger continues, and the costly
spillovers between sovereign and financial risk in Italy remain
a threat," the IMF said in an update of its World Economic
Outlook.
The Fund added:
"Within the euro area the significant revisions are for
Germany, where production difficulties in the auto sector and
lower external demand will weigh on growth in 2019, and for
Italy where sovereign and financial risks and the connections
between them are adding headwinds to growth".
Deputy Premier and Interior Minister Matteo Salvini hit back
against the IMF's statement labelling Italy a global risk
factor.
"Is Italy a threat and a risk for the global economy?
"On the contrary, the IMF is a threat to the worldwide
economy, with its recent history of economic recipes featuring
mistaken forecasts, few successes and many disasters,"
anti-migrant Euroskeptic League leader Salvini told reporters in
Rome.
The other deputy premier, Industry and Labour Minister Luigi
Di Maio said the International Monetary Fund's listing Italy and
Brexit as global growth threats "does not discourage us" and
there is "no turning back" on economic policy.
"The European Commission president has already replied to the
IMF saying they were wrong to trust the IMF on Greece with
austerity," he said.
"We are creating a new welfare state: we're aren't turning
back, vis-a-vis people who actually define Italy one of the
causes of the economic recession.
"We can't accept it...If they think they can discourage us
with some figures they're wrong: there's no turning back".
Economy Minister Giovanni Tria said Italy is a not a risk
factor for the global economy but the IMF's own policies are.
"I don't think Italy is a risk, either for the EU or
globally," he said.
The risk, he said, came from the "policies advised by the
IMF".
At the IMF and at the European Commission, he said, "(they
say) you must accumulate fiscal buffers to be ready and have the
space to react in case of crisis, but with this thesis you don't
see that in order to accumulate means to react to the crisis you
create the crisis".
Tria said "our public finances don't run any risk, first of
all because they are estimated on a yearly estimate of 0.6%. Our
commitments with the (European) Commission regard the structural
deficit which therefore is not subject to a variation of the
changing short-term trend".
Tria also ruled out a supplementary budget saying there will
only be one "if revenues and outlays change".
The Bank of Italy said Friday that it, too, forecasts the
Italian economy will grow 0.6% this year, down 0.4 of a
percentage point on its previous prediction.
The central bank said it foresees economic growth of 0.9% and
1% in 2020 and 2021 respectively, while adding that there was a
risk of the outlook being revised down.
It also said that Italy may have dipped into recession in the
second half of last year.
In technical terms, a country goes into recession if it posts
two consecutive quarters of negative growth.
Salvini said Italy is "absolutely" prepared for a fresh
economic contraction if it happens.
Premier Giuseppe Conte said the situation showed the
government was right to pass an expansive budget law for 2019,
with the deficit-to-GDP ratio set to be over 2%.
Economy Minister Giovanni Tria, meanwhile, said that EU
budget rules sometimes make problems worse rather than solving
them.
"The idea that virtuous public finance behaviour should be
imposed with limits that make deviant behaviour increasingly
costly has not worked well," Tria said.
"External limits sometimes aggravate the conduct that they
want to correct.
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