Wednesday, May 31, 2023
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Italy to cut 2024 growth forecast amid ECB rate hike, EU funds delay

By Giuseppe Fonte

ROME (Reuters) – The Italian government plans to cut its 2023 economic growth forecast as it weighs Negative impact of rising interest rates and difficulties spending money for post-COVID recovery in the EU.

Rome will publish new estimates for this year and next in its Economic and Financial Document (DEF) next week, which two sources say will also sound a warning about investing in these EU transfers Latency may worsen.

Italy in November last year pegged growth in the eurozone’s third-largest economy at 0.6 percent this year and 1.9 percent in 2024.

2024 Forecast will increase to 0.9%. But one of the sources said the new 2021 estimate could be lower than 1.8%.

Economy Minister Giancarlo Giorgetti last week said 2024 the economic outlook was improving, but in an implicit critique of ECB policy, more efforts to curb inflation High interest rates could pose a threat to growth.

A Treasury spokesman said the ministry had taken a cautious approach, leading it to use the least optimistic forecast of a range of possible outcomes.

DEF also cut its fiscal deficit forecast to 4 this year. Percentage of national output started at 4.5%, sources said.

Estimates under development are under a constant policy scenario and therefore exclude support measures for households and firms that the government also intends to publish in DEF.

The final target, due in mid-April, is generally more ambitious than forecasts reflecting the current economic outlook.


A key issue affecting 2024 outlook is whether Italy can catch up with the post-COVID recovery funding scheme.

Italy will receive approximately 200 billion euros ($200.88 million US dollars) through 2026 grants and low-interest loans, making it the largest beneficiary of EU programmes.

However, the government is falling behind on the targets and milestones agreed with Brussels in exchange for aid, and spending already received. €1 billion lower than forecast in the initial financial framework laid out by Meloni’s predecessor Mario Draghi in 200.


In order to gain some flexibility, EU Affairs Minister Rafael Fito said he was in talks with Brussels to replace some of its original recovery plans.

But the source added that an agreement on this was unlikely by the end of April, complicating budget policy planning.

(1 USD=0.9179 EUR)



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