Saccomanni Says Italian Bond Yields Offset Austerity GDP Effect
February 09, 2012, 2:00 PM ESTBy Lorenzo Totaro
Feb. 9 (Bloomberg) -- Bank of Italy Director General Fabrizio Saccomanni said current Italian government bond yields are offsetting the negative effects of austerity measures on the nation’s gross domestic product.
“At the current levels” of bond yields, “the effects on GDP of the latest austerity plan have already been compensated for,” he told reporters today at a briefing in Rome.
Italy’s GDP will probably fall between 1.2 percent and 1.5 percent this year, Saccomanni said, calling his forecast “less pessimistic” than the International Monetary Fund’s prediction for a 2.2 contraction in Italy’s economy.
This year’s recession will weigh on Italian banks’ revenue and increase their credit risks, Saccomanni said, even as recent capital increases have improved lenders’ finances.
“The capital increases, carried out before and after the recommendations of the European Banking Authority, have improved the soundness of the main banks,” he said.
Saccomanni reiterated the central bank’s forecast that Italian debt will start falling next year.
To contact the reporter on this story: Lorenzo Totaro in Rome at ltotaro@bloomberg.net
To contact the editor responsible for this story: Jeffrey Donovan at jdonovan26@bloomberg.net
