MILAN (Reuters) – Economy Minister Giovanni Tria expects Italy’s growth to pick up in the second half of 2019 as government measures to revive a virtually stagnant economy take effect.
Italian gross domestic product fell 0.1 percent in the third and fourth quarters of last year, putting the euro zone’s third largest economy into a technical recession of two straight quarters of declining GDP.
But an unexpected rise in industrial output in February suggested Italy may already have exited the shallow recession it fell into, economists said. [nL8N21S4MZ]
Tria said on Sunday in an interview with state TV Rai that measures Rome is taking to support the economy would hopefully have a “positive although limited” impact on GDP growth rate, which the government last week cut to an estimated 0.2 percent for 2019. [nL8N21R65V]
“This implies a sustained growth as soon as from the second half of the year,” he said.
Growth will be lifted in the second half of the year by a stimulus package that includes tax breaks on investments, lower property taxes on factories and warehouses, and simplified procedures for public tenders, the government said.
Without this so-called “growth decree” GDP would have risen 0.1 percent this year, it estimated.
The government currently expects GDP growth to strengthen next year to 0.8 percent.
Tria reiterated on Sunday that the government ruled out a budget correction for this year, as well as a wealth tax.
This would “hit at heart the savings of Italian people and have a destructive impact on growth,” he said.
The government will update its targets again in September, when it will have to find a way to avoid some 23 billion euros ($26 billion) of hikes in sales tax scheduled to take effect in 2020, but which the ruling parties have promised to scrap.
(Reporting by Giulio Piovaccari; Editing by Angus MacSwan)