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Standard & Poor's says GDP growth to average just 0.5%

Ratings agency urges labour reform, liberalization in Italy

28 January, 15:40
Standard & Poor's says GDP growth to average just 0.5% (ANSA) - Rome, January 28 - Annual economic growth in recession-battered Italy will average only 0.5% between now and 2016, international ratings agency Standard & Poor's (S&P) said Tuesday.

That estimate is below the pace of gross domestic product (GDP) estimated by the Bank of Italy, which says GDP will expand by 0.7% this year, and other agencies, which have forecast a GDP expansion in 2014 of 0.6%.

S&P said it was also keeping Italy's sovereign debt under watch because of uncertainty over government policies and a debt that is expected to rise to 134% of GDP by the year-end.

The agency, in a report on sovereign debt in European economies, also urged the Italian government to take further measures to boost productivity, liberalize labour markets and increase GDP growth. It said it could revise its outlook for Italian debt "if the government realized structural reforms in labor markets and products and services ...(leading to) a higher level of growth in the Italian economy". Last week, the International Monetary Fund said that although Italy looks to be emerging from its longest recession in two years it expects the Italian economy to slowly recover, with growth of 0.6% this year and 1.1% in 2015.