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Economy to pick up but spending flat says report

'Growth shy but in place' says Renzi

21 March, 19:22
Economy to pick up but spending flat says report (By Denis Greenan). (ANSA) - Rome, March 21 - The Italian economy is slowly pulling out of its longest postwar dip and will post better-than-expected growth this year but consumer demand will stay flat as the recovery fails to boost spending by recession-weary Italians, according to a new report.

Amid continued light and shade cast on the eurozone's third-largest economy, industrial turnover and orders posted higher-than-expected gains in January. In the latest of a series of conflicting reports from domestic and international bodies, retailers' association Confcommercio revised its 2014 GDP growth forecast for Italy up from 0.3% to 0.5% on Friday. It cited the potential for further growth that could bump up GDP by 0.8% on the year if Premier Matteo Renzi follows through on cutting taxes for households and businesses.

Confcommercio said that if the government fulfills plans to cut income taxes by 10 billion euros and business taxes by 2.4 billion euros, gross domestic product could grow by another 0.3%, bringing its estimate for the year to 0.8%. Consumption for 2014 is forecast to remain stagnant, up from a drop of 0.2%.

But Renzi's cuts could raise them too, up to 1%, according to a Confcommercio study. Otherwise consumption won't increase until 2015 by 0.7%, it said. The retailers' group forecast next year's GDP growth at 0.9%.

In other news, national statistics agency Istat said industrial turnover in Italy was up 3% in January, marking the strongest growth since December 2011.

Driving the growth were sales abroad, Istat added. Turnover was also positive in December, up 1.2%. Italian industrial orders also shot up in January, by 2.6% on the year, Istat said. Compared to December, orders were up 4.8%, marking the sharpest increase since December 2010. Once again, foreign markets drove the spike, Istat said.

Speaking after a European Union summit in Brussels, Renzi said Italy's economic growth "is modest, shy, but it is in place". Strong exports have been important to the recovery but confidence is also a condition for economic development, he added.