- The government will raise the growth forecast for 2023 next month
- Giorgetti warns of interest rate hikes by the ECB
- Italy needs a “cautious and responsible” fiscal policy, he says
ROME, March 6 (Reuters) – Italy appears to have avoided an economic recession despite being hit by expensive energy prices and record high inflation, Economy Minister Giancarlo Giorgetti said on Monday, offering the right-wing government a less gloomy outlook.
However, he warned that rate hikes by the European Central Bank would pose “serious problems” for heavily indebted countries like Italy.
The eurozone’s third-largest economy shrank by 0.1% in the fourth quarter of 2022 compared to the previous three months.
Giorgetti’s comments suggest that Italy’s gross domestic product (GDP) started growing again in the first quarter of this year, as an economic recession is commonly defined as two consecutive quarters of contracting GDP.
“In these early months, government action was focused on minimizing the risk of a recession. According to the latest available data, it appears to have been averted, so we’re keeping our fingers crossed,” Giorgetti said.
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In its Economic and Financial (DEF) document released last November, the Treasury had forecast two consecutive quarters of contraction in GDP through March.
Prime Minister Giorgia Meloni’s government will announce its new growth estimates and public finance targets next month.
Annual growth is now expected to be close to 1%, up from the 0.6% target set in November, a Treasury official said earlier.
The new estimates “will be an opportunity to assess the economic situation, define the medium-term goals and identify the most appropriate measures to be taken to continue supporting families and businesses,” said Giorgetti.
RISING RATES
Italy’s 2023 budget earmarks over 21 billion euros ($22.4 billion) to help businesses and households pay electricity and gas bills in the first quarter of this year.
Rome is working to review and expand those relief efforts, officials said earlier.
As the European Central Bank (ECB) hikes interest rates, Giorgetti said Italy should continue to pursue “prudent and responsible” fiscal policies to reduce its public debt.
The ECB’s anti-inflationary monetary policy “results in rate hikes unheard of in a world used to living with zero or negative interest rates,” Giorgetti said, adding that “this would pose serious problems for heavily indebted countries like Italy.” place”.
The minister spoke via video link to an event at the Università Cattolica del Sacro Cuore in Milan.
($1 = 0.9362 euros)
Editing by Keith Weir
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