Italy budget watchdog says govt’s lower GDP forecast ‘plausible’

ROME: The Italian government may have to cut its 2019 economic growth forecast further though the 1 per cent expansion it now predicts is reasonable, parliament’s budget watchdog ( UPB) said.

The cut to 1 per cent, from 1.5 per cent, was part of a deal Italy reached last week with the European Commission over its expansionary 2019 budget.

The coalition of the anti-establishment 5-Star Movement and the right-wing League also lowered its deficit target to 2.04 per cent of gross domestic product from the 2.4 per cent that Brussels had previously rejected.

The deal averted the risk of disciplinary steps against Rome, ending months of verbal sparring and buoying Italian financial markets.

The UPB, which had said the previous budget was based on an unrealistically optimistic growth target, gave a cautious green light to the economic framework underpinning the new fiscal plan.

“We consider the that the Treasury’s forecast for 2019 is plausible, even though it carries not insignificant risks of downward revisions,” UPB president Giuseppe Pisauro told the Chamber of Deputies budget committee.

Pisauro said the UPB agreed with the government cut in the 2018 forecast, to 1.0 per cent from 1.2 per cent.

The revised budget was approved by the upper house Senate last week and the Chamber of Deputies is expected to give it parliament’s definitive approval on Saturday or Sunday, just ahead of a year-end deadline. — Reuters