Economic growth in Italy was likely strong in Q2, but may slow or come to a halt over the next few months as inflationary pressures increase, according to Economy Minister Daniele Franco.
"We estimate there was robust growth in the quarter that has just ended," Franco said in Rome on Friday.
However, he went on to say that with risks of recession mounting in the eurozone, "there is certainly a risk that growth will end or slow sharply in the second half of the year."
An official forecast of 3.1% growth has been established for this year, whilst the Economy Minister said it may have "carryover" growth of 3% at the end of Q2. This indicates that even if there was stagnation in the second half of 2022, growth for the full year would stand at 3% compared to last year, Reuters reports.
Franco went on to add that inflation in Italy, which last month stood at 8.5%, is "unlikely to come down quickly.” He added that the government would continue to attempt to ease soaring energy costs for businesses and households, particularly for low-income families.
Rome is planning to implement a new aid package of up to €8 billion later in July, government sources told Reuters news agency. This is as well as €33 billion budgeted since the beginning of the year.
In addition, Italy’s average debt servicing costs in 2022 would be, in the main, in line with 2021, despite the steep increase in Italian government bond yields, Franco added, who said he forecasts markets will soon stabilise.
The country’s public debt-to-GDP ratio will see a substantial decline this year compared to 2021’s 151% level, whilst confirming the current deficit-to-GDP target of 5.6%, the Reuters report adds.
"I'm confident that the sustainability of Italy's public finances will contribute to restoring more stable market conditions and bond yields in line with our economic fundamentals," Franco stated.
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