ROME: Italy’s Treasury on September 24 announced a brighter outlook, raising its forecast for economic growth this year and next. It also announced plans to cut the budget deficit by less than previously promised. The brighter outlook from the Treasury’s Economic and Financial Document (DEF) may help the ruling Democratic Party ahead of national elections early next year if voters notice an improvement in living standards, reported the Reuters news agency. More specifically, the treasury said gross domestic product (GDP) will rise by 1.5% this year, increasing its previous projection of 1.1% made in April to reflect better than expected data in the first two quarters and buoyant business sentiment.
For 2018, growth is expected to be 1.5%, up from the previous forecast of 1.0%. “Growth of 1.5% is pencilled in also for 2018 and 2019. These are forecasts that some people may regard as too optimistic, but I think they are totally justified,” Economy Minister Pier Carlo Padoan told reporters after a cabinet meeting approved the document. However, despite the strengthening economy, the government of Prime Minister Paolo Gentiloni gave itself more spending room ahead of the election. According to Reuters, the government raised the forecast for next year’s budget deficit to 1.6% of GDP from 1.2%. The government is slated to unveil its 2018 budget in October. It must be approved by parliament by the end of the year. In Brussels, the European Union is calling on Italy to bring down its huge public debt, which is the largest in the euro area after Greece.