Italy’s upcoming budget outlook will probably incorporate a higher growth forecast for 2023 followed by a worsened outlook for subsequent years, according to people familiar with the matter.
(Bloomberg) — Italy’s upcoming budget outlook will probably incorporate a higher growth forecast for 2023 followed by a worsened outlook for subsequent years, according to people familiar with the matter.
The plan to be unveiled next week by premier Giorgia Meloni foresees economic expansion of 0.9% this year, up from a a previous estimate of 0.6%, said the people, who didn’t want to be identified as the government is still working on the estimates and numbers can change.
Growth in 2024 is then projected at around 1.4% — down from a prior estimate of 1.9% — and the number for 2025 may also be revised down, the people said. This is before factoring in the impact of planned government measures.
The less rosy predictions for the future are in part tied to delays in Italy’s European Union Recovery Fund projects, which are aimed at permanently boosting growth. Slower delivery of those plans will mean a smaller contribution to the euro-zone’s third-biggest economy than previously thought, the people said.
A finance ministry representative said any exact estimates are premature at this time because the impact of lower Recovery Fund use is still being calculated.
Last week, EU affairs minister Raffaele Fitto said the country probably won’t complete some of the projects needed to unlock funds by the bloc’s 2026 deadline, sparking concern about the impact on state accounts.
The government still plans to continue its cautious management of the country’s public finances and is aiming for a 2023 deficit target of 4.35% of output, the people said.
That’s down from a restated 8% deficit last year, after revisions caused by a reassessment of how to account for tax breaks including the so-called “superbonus”on home renovations, which was worth 110% of the amount spent.
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