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Italian Government Cuts 2008 Economic Growth Forecast
Real estate news By Flavia Krause-Jackson and Sheyam Ghieth
September 25, 2007 12:17 EDT
The Italian government cut its forecast for economic growth next year and said increased public spending will contribute to a higher debt than previously predicted. The $1.8 trillion economy will expand between 1.3 percent and 1.6 percent next year, less than July's outlook of 1.9 percent, Finance Minister Tommaso Padoa-Schioppa said during a parliamentary hearing in Rome today. Italy's debt will rise to 103.5 percent of gross domestic product next year, up from a previous forecast of 103.2 percent. The government predicts debt of 105.1 percent this year, the highest in the European Union.
Italy's economic expansion has been driven by growth in the European Union that has fueled exports and boosted confidence. The European Commission on Sept. 11 cut its forecast for EU growth this year as the collapse of the U.S. subprime mortgage market boosted the cost of credit and threatened to choke growth.
``We're following this day by day,'' Padoa-Schioppa said. ``It could very well be that the effect is worse than what we think now. So far the news on Italian banks is reassuring. This does not mean it won't affect the Italian economy and this has already been, in part, taken into account.''
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