(see related story on budget)
Italy is in danger of going into
recession next year and the financial markets could end up
forcing the government to change its economic policy, according
to a new report by Goldman Sachs.
The report on global growth entitled Landing the Plane said
Italy was one of the risk factors that could complicate the
outlook for the European market in 2019.
It said that, with a dispute with the European Commission
over the government's budget plans "unresolved", the Italian
economy was expected to "flirt with recession at the start of
next year".
It forecast that Italy's GDP growth next year would be 0.4%,
compared to a consensus among analysts of 1%.
The report said "Italy is casting a dark cloud" over the
European market outlook, adding that "things could get worse
before an improvement is seen".
Goldman Sachs said it was skeptical about the ability of
Brussels or Rome to "change direction" in the budget
negotiations.
Its analysts said that it was "more likely that the pressure
of the markets catalyzes a return to budget discipline".
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