Italy statistics bureau slashes 2019 GDP forecast to 0.3%, but more upbeat than government

May 22, 2019

ROME (Reuters) – The Italian economy will grow by 0.3% percent this year, national statistics bureau ISTAT said on Wednesday, slashing the outlook from a 1.3% projection it made in November.

The new forecast reflects a slowdown in international trade and weaker prospects for the European economy, ISTAT said, as well as the unexpected slump over the second half of last year when Italy fell into a shallow, short-lived recession.

It is above the latest forecast by the government of the anti-establishment 5-Star Movement and the right-wing League, which last month estimated 2019 growth of 0.2%.

The statistics institute’s forecast incorporates stronger- than-expected growth data in the first quarter of this year, while the government’s did not.

ISTAT said in its twice-yearly forecasting note that growth this year would be based entirely on domestic demand, while trade flows would make no contribution.

It warned of downside risks to its central scenario from a possible further weakening of international trade and a worsening of Italian credit conditions connected to domestic political tensions and the global economy.

Italy emerged from recession in the first quarter, when gross domestic product rose 0.2% from the previous three months.

ISTAT forecast that employment in Italy would edge up 0.1 percent this year, but the jobless rate would rise to 10.8 percent from 10.6 percent in 2018 due to more people entering the labor market.

An ISTAT spokesman said this was partly due to the government’s new “citizens’ income” welfare benefit which is only available to people who agree to look for work.

In November, ISTAT forecast a 2019 jobless rate of 10.2%.

((Reporting by Gavin Jones) ; Rome newsroom +39 06 8522 4350, rome.newsroom@reuters.com)

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