Tria says Italy will hit deficit target, no need for correction

Italian Economy Minister Tria holds a news conference after a Euro zone finance ministers meeting in Brussels
FILE PHOTO – Italian Economy Minister Giovanni Tria holds a news conference after a Euro zone finance ministers meeting in Brussels, Belgium November 19, 2018. REUTERS/Eric Vidal

January 23, 2019

DAVOS, Switzerland (Reuters) – Italy will meet its budget deficit target for this year and there is no need for any corrective measures to prevent an overshoot, Economy Minister Giovanni Tria said on Wednesday.

Rome is targeting the deficit at 2.04 percent of gross domestic product, but with economic growth slowing many analysts expect a higher figure unless new belt tightening measures are adopted.

“There is no need for any corrective package,” Tria told Reuters in an interview. “Corrective measures at a time of sharp economic slowdown, which would tend to accentuate the slowdown, would run against all logic,” he added.

The government of the anti-establishment 5-Star Movement and the right-wing League lowered the target after a protracted tussle with the European Commission which had rejected its original goal of 2.4 percent.

The Bank of Italy said last week that GDP probably contracted at the end of last year for the second straight quarter, putting the euro zone’s third largest economy into what economists define as a technical recession.

The central bank forecast growth of 0.6 percent this year, around half the government’s 1.0 percent target, which would reduce revenues and make it harder to meet public finance goals.

Market pressure on Italy has eased considerably since the budget deal with the Commission, but signs of marked fiscal slippage could once again dampen investor appetite for Italian debt.

(Reporting by Silvia Aloisi, writing by Gavin Jones, editing by Steve Scherer and Toby Chopra)

Source link