- Treasury chief economist says country `still on track'
- Italy third-quarter GDP grew 0.2%, missing expectations
The Italian government insisted that it will meet its growth target for this year as an economic slowdown in the third quarter prompted concerns that it would fail to do so.
“Italy is still on track” to record an annual economic expansion of 0.9 percent as forecast by Prime Minister Matteo Renzi’s government, Riccardo Barbieri Hermitte, the Treasury’s chief economist said in an interview on Friday.
He spoke after a preliminary report showed gross domestic product expanded 0.2 percent in the three months through September, following 0.4 percent and 0.3 percent increases in the first two quarters. While Italy’s lackluster growth in the summer months paralleled the euro region, GDP data below economists’ estimates could make it difficult for Renzi to meet public-finance goals and reduce the country’s debt-to-GDP ratio next year.
“At this stage it gets very difficult for the government to meet its goal” on GDP, said Loredana Federico, an economist at UniCredit Bank AG in Milan. She said that even after the latest data, her growth projection remains an annual 0.8 percent.
“To be honest, I’d hoped for a 0.3 percent increase,” Renzi said in a press conference in Rome on Friday. He added that he hopes the number will be revised upwards by the national statistics institute.
The euro region’s third-biggest economy would have to grow between 0.8 percent and 0.9 percent in the final three months of this year to reach the GDP target set by Renzi in his budget plan, according to Bloomberg calculations that do not take in account seasonal effects and other factors.
The Treasury’s chief economist suggested that an economic expansion of “slightly more than 0.4 percent” in the final quarter of the year would allow Italy to meet the goal. He also suggested that the data for the three months through September will likely be revised in the second reading.
“Services data for third quarter are not available yet, calendar adjustments subtract from growth in the period, and in any case, data in the early stages of a recovery don’t fully reflect the real strength of the economy,” Barbieri said.
Italy’s public debt increased to 2.19 trillion euros ($2.36 trillion) in September, the country’s central bank said earlier on Friday. The government plans to cut Italy’s debt to 131.4 percent of GDP next year, down from 132.8 in 2015. It also scaled back on its reduction of the deficit for next year, while eliminating a much-hated tax on main properties starting from 2016.
"We are obviously facing a challenging external environment outside Europe and that is why the Italian government decided to reduce the budget deficit more gradually,” Barbieri said.