Growth slowing, foreign investors cutting BTP exposure - BoI

(ANSA) - Rome, October 19 - The Italian economy is slowing, the Bank of Italy said on Friday, reporting that GDP rose by 0.1% in the third quarter of 2018 with respect to the previous three months. In spring, Italy's GDP rose 0.2% in quarter-on-quarter terms, which in turn was down slightly on the growth registered in the winter months, the central bank said. The effects of the government's 2019 budget are linked to "the confidence of savers and investors towards the process of righting the public finances," the Bank of Italy added.
    The government has said it will let Italy's deficit rise to 2.4% of GDP next year in an expansive budget designed to boost growth.
    The European Commission has warned Italy that the plan would breach the Stability and Growth Pact and Italy's bond spread has come under heavy pressure. Foreign banks have reduced their exposure in Italian BTP Treasury bonds by 42.8 billion euros in the first eight months of the year, the Bank of Italy said. In July and August they sold sovereign bonds to the tune of 8.7 billion euros, the central bank said.
    Italian financial market have been racked by strong tensions linked to investors' uncertainty on the direction of economic and financial policies" and this has boosted the German-Italian bond spread, the Bank of Italy said Friday.