Govt confident Italy will beat low growth forecast
Istat forecasts slower expansion than Saccomanni sees for 201404 November, 18:46
"The economy will recover in the fourth quarter of this year," with solid growth in sight for 2014, Saccomanni predicted after a meeting in London with British Chancellor of the Exchequer George Osborne. The government of Italian Premier Enrico Letta's latest forecasts for Italy's gross domestic product (GDP) foresee an average loss in GDP of 1.7% this year, followed by positive growth of 1% in 2014. However, those forecasts are stronger than the expectations coming from national statistical agency Istat which on Monday said that GDP growth in 2014 will likely average about 0.7% after a decline of 1.8% this year.
This confirms data that the agency presented last week to parliament, which is now debating measures included in the most recent Italian government budget bill.
"We have slightly different opinions," said Saccomanni.
Both Saccomanni and Istat agree on forecasts that Italy is expected to pull out of its longest recession in more than two decades by the end of this year.
But opinions diverge on the strength of the recovery.
Saccomanni said part of the reason he is feeling optimistic about the 2014 economic rebound is because of measures in the budget bill which he says will boost growth.
"Our budget is prudent but it helps us in this process of economic recovery," said Saccomanni.
Government spending measures and fiscal reforms included in the economic blueprint may not have been taken into account by Istat when the agency made its less rosy forecasts for next year, he added. The Italian government is in the process of finalizing a budget for 2014, with measures that include pledges made in July to pay an additional 20 billion to 25 billion euros in overdue bills owed by the public sector to private businesses starting January 1, 2014. As well, it promised to pay some 40 billion euros already allocated to settle languishing supplier invoices.
The government believes that cash injection will give the economy a much-needed boost.
Italian Labour Minister Enrico Giovannini downplayed the differences between government and Istat figures, suggesting that a surge of confidence in the anticipated recovery could make an important difference.
"If confidence grows, economic growth will reach 1% …the amount predicted by the government," said Giovannini.
Istat warned that Italy's economy is being held back by weak domestic demand conditions which it said has been "only partially offset by the positive contribution of external demand, as import growth is projected to remain negative and export slightly increasing". That is reflected in weak job creation and an unemployment rate that Istat said Monday will likely average 12.1% for 2013, rising to 12.4% in 2014.
Experts say there is a time lag between an economy recovering from recession and an upturn in employment.
However, economic conditions should improve next year, the agency said.
"Private consumption should appear positive and investments will increase supported by the export (sector)".