Italy’s Tria sees risk of stagnation
Italy’s treasury minister says he doesn’t see a recession on the horizon but acknowledged there could be a period of stagnation. The Italian economy has been slowing for the last year and GDP declined by 0.1% in the third quarter, the weakest result since 2014. Last week, industrial output for November came in much weaker than expected, increasing the risk of recession for the eurozone’s third largest economy.
“Let’s wait for data for the last quarter of 2018. I don’t see a recession, I see a situation of stagnation,” Tria said in an interview in Italian daily Corriere della Sera. He confirmed the government’s commitment to cutting the country’s debt pile, the second-highest in Europe, but said growth depended also on monetary policy and the international outlook. In October, the European Commission rejected Italy’s 2019 budget which had included a deficit target of 2.4% of GDP, saying it would not cut Italy’s debt and was an “unprecedented” breach of EU fiscal rules. In December, Rome rejigged the targets, cutting the planned deficit to 2.04% to strike an agreement with Brussels.
“The deficit will be kept under control,” Tria said, saying he had never considered stepping down as minister due to wrangling over the budget. He said he hoped EU budget rules could be adjusted to take account of changing conditions to help growth.