World Economy

Italy Will Not Lift 2017 GDP Growth Forecast

Italian companies believe the overall economic situation has improved.
Italian companies believe the overall economic situation has improved.

The Italian government will confirm an economic growth forecast of 1% for 2017, in a multi-year fiscal plan due to be presented next week, Junior Economy Minister Enrico Morando said on Saturday.

Italy’s gross domestic product rose 0.9% in 2016, compared with 0.8% growth in 2015 and business confidence has improved steadily in recent months, with surveys of purchasing managers pointing to accelerating activity, Reuters reported.

This has raised expectations that the treasury may lift Italy’s growth forecast for this year, which it said last year would be 1%, in its Economic and Financial Document.

The fiscal plan will also include a commitment by the government to restart its privatization plan, after it postponed the sales of several state-owned assets last year.

Morando told reporters at the Ambrosetti workshop in Cernobbio that state fund Cassa Depositi e Prestiti may play a role in the next phase of the privatization program and added oil major Eni, utility Enel and national post office Poste Italiane would likely be involved in the plan.

Italian newspapers have reported that the government could sell its stakes in Eni, Enel, Poste Italiane and other state-controlled companies to CDP as a way to raise funds to cut its huge public debt.

Italy’s finance minister said banks should be allowed to offload their bad loans in a “reasonable” time because selling too fast could hit their financial stability.

The European Central Bank has been pushing lenders with a high ratio of so-called non-performing loans to sell them, causing Italian banks to rush to offload their huge amount of bad loans which account for a quarter of the EU total of €1 trillion ($1.06 trillion) of bad loans.

Pier Carlo Padoan told reporters that he agreed with the ECB policy of stressing the NPLs problem in its supervisory role, but stressed that the sale should not go too fast.

Meanwhile, Italian companies’ views of the overall economic situation have improved in the first 90 days of the year, and expectations for inflation and consumption have returned to growth.

In this context of cautious optimism, the breakdown of the figures confirms the prospects for investment: the share of those who foresee spending more exceeds those who plan a reduction by 14 percentage points.

The super-amortization measure foreseen in the budget law has contributed to that expansion.

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