March 1 (Reuters) – - Italy’s economy grew slightly less than expected in 2018 while the budget deficit and the public debt overshot the government’s targets, data showed on Friday.
Gross domestic product rose 0.9 percent following an increase of 1.6 percent in 2017 which was revised from a previously reported 1.5 percent, national statistics bureau ISTAT reported.
The most recent forecast by the government of Prime Minister Giuseppe Conte was for 2018 growth of 1.0 percent.
Italian GDP registered quarterly declines in each of the last two quarters of 2018, throwing the euro zone’s third largest economy into what analysts call a technical recession.
Monthly indicators have remained weak since then, suggesting no recovery is likely in the near term, and the situation could get even worse.
The coalition of the anti-establishment 5-Star Movement and the right-wing League which took office in June is forecasting 2019 expansion of 1.0 percent. However most independent economists expect growth to be no more than half that rate, and some are forecasting a full-year contraction.
There were three more working days in 2018 compared with the year before, ISTAT said, which increased growth by at least 0.1 percentage points.
Italy’s budget deficit came in at 2.1 percent of GDP last year, ISTAT said, well inside the European Union’s 3 percent ceiling but above the government’s 1.9 percent target.
That compared with a 2.4 percent deficit in 2017 and was the lowest deficit since 2007.
The government is targeting the deficit at 2.0 percent this year, but the goal is looking increasingly arduous due to the slump in economic growth, which hits tax revenues and raises the deficit as a proportion of GDP.
The public debt – proportionally the highest in the euro zone after Greece’s – rose to 132.1 percent of GDP in 2018 from 131.3 percent the year before, missing the government’s target of 131.7 percent.
The 2018 debt-to-GDP ratio was the highest on record, ISTAT said.
The debt is targeted to decline to 130.7 percent this year, but most analysts also expect this projection to be missed.
(Reporting by Gavin Jones, Rome newsroom)