Padoan plays down EC’s debt forecasts

P(ANSA) – Rome, May 5 – The outlook for the Italian economy became a bit darker Monday following fresh estimates, including a new record-high debt ratio from the European Commission, which Economy Minister Pier Carlo Padoan downplayed.BRThe EC forecast showing Italy will hit a record-high ratio of 135.2% debt to gross domestic product (GDP) shouldn’t trigger concerns because the EC did not take account of important new stimulative measures, Padoan said Monday. Policies recently announced by the government of Premier Matteo Renzi will “take time” to kick in, but these will help improve economic growth and reduce the ratio of debt to GDP, said Padoan, who spoke before a meeting of eurozone finance ministers. “Both Brussels and Rome are well aware that the result of the measures taken is not (immediate), but this does not weaken their action,” he added.BRThe Renzi government has forecast a debt-to-GDP ratio of 134.9% in 2014.BRIn its regular spring economic outlook, the EC also raised its forecast for the average Italian unemployment rate this year to 12.8% from its February predictions for 2014 of 12.6%.BRIt is expected to fall “marginally” to 12.5% in 2015.BRAt the same time, Italy’s national statistical agency Istat produced a slightly stronger jobless forecast, predicting unemployment will rise to 12.7% this year, but drop to 12.4% next year.BRRecent Istat jobless statistics showed that Italy’s overall unemployment rate reached 12.7% in March, while the jobless rate for young people under 25 reached 42.7%.BRFor 2013, the average annual jobless rate was 12.2% with some 478,000 jobs lost, Istat has reported.BRIn Monday’s spring economic forecast, the EC said that it had revised its estimated debt ratio upwards because Renzi’s measures include plans to pay off billions of euros in outstanding bills owed by the Italian government to private businesses.BRIt also warned that the Italian economy will continue to struggle this year.BR”After a severe recession in 2012 and 2013, a slow recovery mainly driven by external demand is projected in 2014,” said the report. “With credit conditions set to ease over the forecast horizon, growth is expected to strengthen in 2015.BR”Inflation is set to reach a historical low in 2014 amid weak labour-cost pressures and declining energy prices. The government balances adjusted for the business cycle and one-offs are expected to broadly stabilise over 2013-15,” said the report.BRThe EC also said that it expects the debt ratio to recede to 133.9% in 2015, thanks to economic growth as well as privatizations of public assets foreseen for the second part of 2014. Istat also raised questions Monday about the Renzi government’s economic forecasts, the base of its fiscal blueprint for the coming years.BRIstat said that it expects Italy’s GDP will grow by 0.6% this year and 1% next year – slower than Renzi government estimates of growth of 0.8% this year and 1.3% in 2015.BRThose estimates are a significant part of Renzi’s Economic and Financial Document (DEF), which outlines ambitious spending and tax cuts to help boost the economy recovery that is still sluggish after Italy emerged from its longest postwar recession last year.BRThe blueprint includes plans for 10 billion euros in income-tax cuts targeting low-earners each year, leaving an extra 80 euros in their monthly pay packets.BRThe government has said around 4.5 billion euros of the 6.7 billion euros needed to finance those cuts this year will come from an ongoing review of public spending.BRRenzi’s three-year Def also foresees 26 billion euros in further public-spending.BR/P
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