Italy sees 2025 GDP growth of at least 1.2%, junior minister says

Last April the Treasury forecast gross domestic product growth of 1% this year

By Reuters

Published: Sun 8 Sep 2024, 3:22 PM

Italy sees its economy expanding by at least 1.2% in 2025, a Treasury junior minister told Reuters, as the government prepares its medium-term structural budget plan to be submitted to the European Commission by Sept. 20.

Italian daily Il Sole 24 Ore reported on Sunday Rome would set a 2025 GDP growth target of 1.3% or 1.4% when factoring in the expansionary impact of planned tax cuts and higher spending. Excluding policy changes, Rome expects growth of 1.1% next year, the newspaper added.

"An estimate of 1.2% for 2025 works, if it is higher we will be happy," Economy Ministry Undersecretary Federico Freni told Reuters on the sidelines of the TEHA business forum in Cernobbio.

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Last April the Treasury forecast gross domestic product growth of 1% this year and 1.2% in 2025 under a no-policy-change scenario, without setting more ambitious goals.

The upcoming plan will also provide an updated framework for Italy's strained public finances.

Rome was put under a so-called Excessive Deficit Procedure by the EU this year, and the Treasury's plan, which is aimed at cutting the fiscal gap in line with EU prescriptions, must also comply with the latest reform of the bloc's fiscal rules.

The infringement procedure obliges Italy to cut its structural budget deficit net of one-off factors and business cycle fluctuations by 0.5% or 0.6% of GDP per year.

Sources told Reuters late last month that in its medium-term structural budget plan, the government of Prime Minister Giorgia Meloni would stick to a commitment to bring its deficit-to-GDP ratio below the EU's 3% ceiling in 2026.

Il Sole 24 Ore reported that Italy's deficit-to-GDP ratio could fall below 4% this year against the expected 4.3% estimate made in April due to a positive trend in tax revenues.