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Exclusive: Italy to cut 2020 GDP growth target to around 0.6% - sources

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By Reuters
Exclusive: Italy to cut 2020 GDP growth target to around 0.6% - sources
FILE PHOTO: The Italian flag waves over the Quirinal Palace in Rome, Italy May 30, 2018. REUTERS/Tony Gentile/File Photo   -   Copyright  Tony Gentile(Reuters)

By Gavin Jones and Giuseppe Fonte

ROME (Reuters) – Italy will cut its target for economic growth next year to around 0.6%, three sources close to the matter told Reuters on Monday, as the government prepares its 2020 budget to be presented to parliament later this month.

The previous target, issued in April, envisaged growth of 0.8%. Growth this year is now seen at just 0.1%, compared with an April projection of 0.2%.

Under an unchanged policy scenario, gross domestic product next year would be around 0.4%, which will be bolstered slightly by growth enhancing measures in the budget, said two of the sources who asked not to be named.

The new targets, which will form the framework of the budget, must be formally published by Friday.

The budget deficit will be targeted at close to 2.2% of gross domestic product, two of the sources said, though they added that marginal last-minute changes were possible due to ongoing negotiations with the European Commission.

The 2.2% target pencilled in is more likely to be reduced than raised, they said.

This year’s deficit is currently officially targeted at 2.04%, but the sources said it would come in somewhat lower.

Brussels’ main request is that the so-called “structural” deficit, stripped of the effects of the business cycle and one-off items, should not increase next year, one of the source said.

The Treasury declined to comment.

(Reporting by Gavin Jones and Giuseppe Fonte; Editing by Howard Goller)