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Treasury expects growth in the first quarter of this year
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Rome set to upgrade 2023 growth forecast to almost 1%
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Giorgetti warns ECB rate rises pose "serious problems"
(Updates with government official, details)
By Giuseppe Fonte
ROME, March 6 (Reuters) - Italy seems to have avoided an
economic recession despite being hit by costly energy prices and
record high inflation, Economy Minister Giancarlo Giorgetti said
on Monday, offering a less grim outlook for the right-wing
government.
However, he did warn that European Central Bank rate rises
would pose "serious problems" for high-debt countries such as
Italy.
An economic recession is widely defined as two consecutive
quarters of declining GDP and the euro zone's third largest
economy shrank 0.1% in the fourth quarter of 2022 from the
previous three months.
Last November the Treasury forecast two straight quarters of
GDP contraction until March. But now it has revised its outlook
and expects growth in the first three months of this year, a
government official told Reuters.
The more upbeat picture was reflected in remarks by Giorgetti in a speech at a Milan university. "The government's action has focused on minimising the risk of recession. From the latest available data, it seems to have been averted, so let's keep our fingers crossed," Giorgetti told the Università Cattolica del Sacro Cuore.
Prime Minister Giorgia Meloni's administration is due to unveil its new growth estimates and public finance targets next month. Annual growth is now expected at almost 1%, up from the 0.6% target set in November, a Treasury official has previously said.
RISING RATES
The new estimates "will be an opportunity to assess the
economic situation, define the objectives for the medium term
and identify the most appropriate actions to be taken to
continue to support families and businesses," Giorgetti said.
Italy's 2023 budget has earmarked over 21 billion euros
($22.4 billion) to help firms and households pay electricity and
gas bills in the first quarter of this year.
Rome is working to review and extend those relief measures,
officials have previously said.
With the European Central Bank (ECB) raising interest rates,
Giorgetti said Italy should keep following a "cautious and
responsible" fiscal policy in order to lower its public debt.
ECB monetary policy aimed at fighting inflation "is leading
to interest rate hikes unknown in a world that was accustomed to
living at zero or negative interest rates," Giorgetti said,
adding that this "would pose serious problems for highly
indebted countries such as Italy."
Italy's public debt - proportionally the highest in the
euro zone after Greece's - fell to 144.7% of GDP in 2022 against
a government target of 145.7%, ISTAT said last week.
($1 = 0.9362 euros)
(Editing by Keith Weir and Gavin Jones)
