Italy slashes 2012 growth forecast

Italy on Wednesday said its recession would deepen in 2012 with the economy shrinking 1.2 percent and delayed a target to balance its budget by 2013, warning there was still "a long way to go."

"Despite the progress made, there is still a long way to go in a context that is more favourable but still characterised by elements of uncertainty," a report approved by the cabinet that accompanied the new forecasts said.

"The coming months offer a window of opportunity that must be used," it said, pointing to "a further deterioration of the economic situation since December" as the economy entered recession in the second half of last year.

Prime Minister Mario Monti, who came to power in November to replace media magnate Silvio Berlusconi as the eurozone debt crisis hit Italy, had initially vowed to uphold the previous government's pledge to balance its budget by 2013.

His technocrat government has now raised the 2013 deficit target from 0.1 percent of Gross Domestic Product (GDP) to 0.5 percent, which would still be within new EU Fiscal Compact treaty limits.

The government said it would cut the deficit -- the shortfall between revenues and spending to 0.1 percent in 2014 and to zero by 2015.

The International Monetary Fund (IMF) offered a more gloomy outlook on Tuesday, forecasting that Italy's deficit would only be reduced to 2.4 percent this year, 1.5 percent in 2013 and then rise back to 1.6 percent in 2014.

"The reconfiguration of the Italian economy will take several years. We are aware that what we are doing is just the beginning of an operation that will take several years," Monti said at a press conference.

While Monti has been hailed as helping the country through the debt crisis storm which has rattled the eurozone, skittish markets spooked over the outlook for Italy and Spain have again been under pressure in recent days.

Rome paid sharply-higher rates on three-year bonds at a sale last week while Madrid's borrowing costs also rose, although they have eased back this week.

Wednesday's report also said Italy's's massive public debt would drop to 120.3 percent of GDP in 2012 and continue to decrease over the next few years, to 117.9 percent in 2013, 114.5 percent in 2014 and 110.8 percent in 2015.

It also said the economy would start to grow again in 2013 with a 0.5-percent expansion that year, 1.0 percent in 2014, and 1.2 percent in 2015.

The IMF is forecasting Italy's economy will shrink by 1.9 percent this year. "Re-balancing the finances has been accompanied by various reforms aimed at removing the many constraints which have held back Italy's growth potential," Monti said.

"The reforms should boost growth by 2.4 percentage points between 2012 and 2020," he said.

Milan's stock market was down 2.43 percent after the figures were announced.

The revised economic outlook does not come at a good time for Monti who implemented a series of biting reforms to rein in the debt but has struggled to make inroads with his "Grow Italy" plan as his approval ratings begin to wane.

There has been trade union anger in Italy over the government's reform measures and public outrage over a series of suicides linked to the economic crisis.

"The crisis is forcing families, young people, workers and businesses to pay a very high price, and sometimes there are experiences which end in desperation," Monti said.

About 1,000 people voiced their sympathy with the victims of the crisis in a silent protest outside Rome's landmark Pantheon late Wednesday amid calls that everything must be done to stop the suicides.

"The state must find a response to the difficulties of small and medium-sized companies to restart their activities and for the Italian economy to improve," Maurizio Flamini, head of the Rome region's small and medium-sized business lobby, Federlazio, told AFP.

The former eurocrat's government has acted fast to pass reforms to overhaul the pension system and labour market and has imposed budget cuts and tax hikes but as in the eurozone, such policies are taking a toll on growth.

Loading...

Editor’s note:Yahoo Philippines encourages responsible comments that add dimension to the discussion. No bashing or hate speech, please. You can express your opinion without slamming others or making derogatory remarks.

  • Profiles of foreigners due to be executed in Indonesia
    Profiles of foreigners due to be executed in Indonesia

    Eight foreign drug convicts are set to be executed in Indonesia after losing all appeals for clemency. Here are brief profiles of the inmates, who include two from Australia, one each from Brazil and the Philippines, and four from Africa. Myuran Sukumaran A ringleader of the Bali Nine drugs smuggling syndicate, Sukumaran was born in London in 1981 and moved with his Sri Lankan family to Australia when he was a child. Enticed by the prospect of easy money, in 2005 he helped to organise a …

  • Pacquiao sees fist of God delivering win over Mayweather
    Pacquiao sees fist of God delivering win over Mayweather

    Filipino boxing hero Manny Pacquiao is confident he can beat American arch-rival Floyd Mayweather in Las Vegas on Saturday with the power of God, after abandoning a life he said was packed with sin condemning him to hell. Pacquiao is in top form both in mind and spirit after he traded his boozing, gambling and womanising ways for a devout life of prayer, his spiritual adviser, Jeric Soriano, told AFP in a recent Manila interview. Except the world got to him," Soriano said of Pacquiao's …

  • Indonesia says will not delay execution of Filipina convict
    Indonesia says will not delay execution of Filipina convict

    JAKARTA (Reuters) - The execution of a Filipina drug convict by an Indonesian firing squad will not be delayed despite last-minute appeals by the Philippine government, the attorney general said on Tuesday. Indonesian President Joko Widodo earlier met with a migrant workers' group to discuss the case of Mary Jane Veloso, who is one of nine people set to be executed within hours. (Reporting by Rosemarie Francisco in MANLIA and Gayatri Suroyo in JAKARTA; Editing by Clarence Fernandez) …

  • Nine face midnight firing squad in Indonesia, hopes for reprieve gone
    Nine face midnight firing squad in Indonesia, hopes for reprieve gone

    By Kanupriya Kapoor CILACAP, Indonesia (Reuters) - Nine drug traffickers held emotional farewell meetings with their families at an Indonesian prison on Tuesday, after Jakarta rejected last-ditch pleas from around the world for clemency and ordered their mass execution to proceed within hours. "I won't see him again," said Raji Sukumaran, the mother of an Australian who will go before a firing squad along with a fellow countryman and convicts from Nigeria, Brazil, the Philippines and …

  • Aquino appeals to Indonesia one more time to keep Filipina alive
    Aquino appeals to Indonesia one more time to keep Filipina alive

    Philippine President Benigno Aquino said he made one last appeal to the Indonesian government to spare a Filipina among nine prisoners set to be executed for drug trafficking on Tuesday as she could be a vital witness in prosecuting drug syndicates. It was Aquino's third personal appeal, after the Indonesian attorney general rejected the Philippines' request on Monday for a second judicial review of the case of Mary Jane Veloso, who her lawyers say merely served as an unknowing mule to drug …

  • Cheapest motorcycles in the Philippines under PhP 40,000
    Cheapest motorcycles in the Philippines under PhP 40,000

    Are you hunting for an affordable motorcycle which you can use for personal use or a family service vehicle? Carmudi PH presents to you some of the cheapest motorcycles in the Philippines today. These budget friendly motorbikes will surely not hurt your pockets, and you may even buy them on the spot instead of monthly […] The post Cheapest motorcycles in the Philippines under PhP 40,000 appeared first on Carmudi Philippines. …

  • Indonesia gears up for executions as families wail in grief
    Indonesia gears up for executions as families wail in grief

    Indonesia made final preparations Tuesday to execute eight foreigners by firing squad, as family members wailed in grief during last visits to their loved ones and ambulances carrying white coffins arrived at the drug convicts' prison. Relatives of Myuran Sukumaran and Andrew Chan, the Australian ringleaders of the so-called "Bali Nine" heroin trafficking group, arrived at Nusakambangan prison calling for mercy for their loved ones, with Sukumaran's sister collapsing in grief. They are among …

  • Labor Day heat index may heat feverish levels

    Temperatures could soar on Labor Day this Friday, with the "init factor" reaching the 40°C level in some areas of the country. Labor Day is a holiday in the Philippines, though many Filipinos are expected to go out to the streets to call for better working conditions. The so-called "init factor" or "heat index" gives the apparent temperature, taking into account the actual air temperature as well as other factors such as humidity. State weather agency PAGASA's Tuesday heat index indicated …

POLL

Should Aquino be held accountable over the Mamasapano operations?

Loading...
Poll Choice Options