Italy will slowly emerge from its fourth recession since 2001 and miss its goal of a balanced budget next year, the European Commission said.
Italy’s gross domestic product will fall 1.4 percent this year before increasing 0.4 percent in 2013, the Brussels-based commission said in a report today. The budget deficit will be 2 percent of GDP in 2012 and 1.1 percent next year, it said.
The euro region’s third-biggest economy is “is set to continue to contract in the first half of 2012, as spending and investment plans of consumers and firms are held back by poor labor-market prospects and still-high uncertainty in financial markets,” the commission said.
Prime Minister Mario Monti’s government last month delayed its balanced-budget goal by one year until 2014 amid a deepening recession. The deficit of 0.1 percent previously estimated for 2013 won’t be reached until 2014, the Cabinet said in its three- year economic plan.
Italy’s debt will peak at 123.5 percent of GDP this year and fall to 121.8 percent in 2013, helped by an increasing primary surplus, according to today’s report. Those forecasts compare with a debt at 123.4 percent this year and 121.5 percent next estimated by the government last month.
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