News Analysis: Italy's economy shows signs of improvement

Source: Xinhua| 2019-09-26 22:06:19|Editor: Li Xia
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ROME, Sept. 26 (Xinhua) -- Italy's economy is showing signs of improvement as analysts say consumer demand may be on the rise which could help boost economic growth over the final months of the year.

Italy's new government forecast the economy would expand just 0.1 percent for 2019 as a whole, and 0.4 percent next year, media reported last week, compared to the previous government's targets of 0.2 percent and 0.8 percent, respectively.

The consensus among economists, investment banks and other financial institutions is now that Italy will see its economy contract by 0.2 percent to growth of 0.1 percent for 2019, with growth of 0.2 percent to 0.5 percent in 2020.

Some analysts are predicting that the coming weeks could show some positive signs as investments from the China-proposed Belt and Road Initiative and the payouts from the government's minimum "citizen's income" plan are starting to pay dividends.

The export sector continues to act as an economic driver for the country, and low interest rates from the European Central Bank -- with the benchmark rate at the current negative 0.5 percent -- is giving companies more access to money.

"I think we can safely say that things are looking better for Italy than they did a few months ago," said Stefania Tomasini, chief economist with the Italian economic think-tank Prometeia, who told Xinhua that the overall trend is positive.

"I think we will start to see a trickle of good news going forward unless the European economy slips into recession, which is still not likely," said Tomasini.

She added that increased political stability and more pro-European Union policies from the new government are helping to assuage investor concerns about Italy's medium-term prospects.

It is not surprising that exporters continue to be a major part of Italy's economic growth picture, said Massimo Baldini, professor of political science and finance at the University of Modena and Reggio Emilia.

"This is a typical story for Italy, where a few thousand exporters, mostly small and medium-sized companies, perform well under most conditions," said Baldini.

Baldini agreed with Tomasini that the economy could see some relief over the short term, though he predicted it would not be enough to raise growth levels.

Positive economic news would be a welcome development for the Italian government as it starts to ramp up for what are expected to be difficult negotiations for next year's budget.

According to Italian media, the government is expected to aim for a budget deficit equal to around 2.3 percent of the country's gross domestic product, compared to 2.04 percent this year.