Italy raises full-year GDP growth forecast to 6.0%, lowers debt-to-GDP ratio at 9.5%

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Italy raises full-year GDP growth forecast to 6.0%, lowers debt-to-GDP ratio at 9.5%

Italy, the third-largest economy in eurozone and the eighth-largest in the world by nominal GDP (Gross Domestic Product), had raised its full-year economic growth forecast for 2021 to 6.0 per cent from a prior 4.5 per cent set in April, while budget deficits were revised downwards to 9.5 per cent of the nation’s GDP from a prior projection of 11.8 per cent, two senior officials of Italian Government had said on condition of anonymity on Tuesday given the scale of sensitivity of the issue.

More importantly, a lower debt-to-GDP ratio would help the Italian Government to wrap up fiscal 2021 below a prior target of 159.8 per cent, however the economy’s debt-to-GDP ratio would still hover above a 2020 reading of 155.6 per cent and would set a new record since World War II, added the Government sources.

On top of that, a press agency report had quoted one of the officials familiar with the issue as saying that a plan to reduce the country’s debt-to-GDP ratio had yet to be finalized, but the Government had been vying to vent out a way to trigger a downward trend in budget deficits over next few years.

Italy raises full-year GDP growth forecast

Aside from that, the Government officials had added that a meet of leading coalition figures, which was taken place on Tuesday, had agreed to the new projections, while the forecasts have been set to be approved in the cabinet as early as on Wednesday after having been formalized in the Govt.’s twice-yearly DEF (Economic and Financial Document).

Economy Minister Daniele Franco, in tandem, had said in the Tuesday’s meet of heavy-weight political figures in Italy’s coalition Government that the DEF projections would allow the Govt.

to spend an additional 1 per cent of GDP at the most, a press agency report added citing sources present at the meeting.