Italy to return to growth in autumn

GMT 01:30 2014 Wednesday ,22 October

Arab Today, arab today Italy to return to growth in autumn

An outdoor market in Naples, Italy

 Italian economy would return to a timid growth in the last months of 2014 and finally emerge from recession with an output rise of 0.5 percent in 2015, economic think-thank Prometeia said.
The recovery would be sustained by euro's depreciation, expansionary policies and Italian exports, which are expected to reach pre-crisis levels between 2015 and 2017, the institute said in the Economic Outlook unveiled on Oct. 17.
"We expect Italy's economy to start growing again in autumn, but very mildly," Prometeia head of economic analysis and forecasting Stefania Tomasini told Xinhua.
"Considering the third quarter of 2014 will most likely be negative still, the GDP (gross domestic product) growth may be around 0.1 percent in autumn. For the end of this year, therefore, it is more accurate to speak of a 'halt in the GDP fall' rather than recovery," she specified.
Despite the positive variation, Prometeia said Italy's GDP would overall decrease 0.4 percent in 2014.
Italy would really pull out of recession in 2015 with a 0.5 percent growth, and recovery would then consolidate moderately. The country's output is expected to increase more than 1 percent in 2016 and 2017, respectively.
The depreciation of the euro against U.S. dollar and emerging-market currencies is considered a necessary condition for this forecast to be fulfilled, the think-thank said. A relatively weak euro would in fact boost Italian and European demand, and bring about a rise in Italian exports.
"The key factor for this breakthrough is the depreciation of the euro, which has decreased around 7 percent in value against the dollar since August," the report said.
Yet, favorable euro exchange rates alone would not be enough. Italy's prospects to emerge from recession would also depend deeply on national expansionary fiscal policies that were launched in 2014 and are due to be consolidated next year.
Prometeia Outlook therefore considered the possible impact of the 2015 budget law, which was presented last week.
"Out forecast took into consideration the likely effects of Italy's 2015 budget on the basis of what the cabinet has so far disclosed in its papers," Tomasini explained.
"This means expansive budgetary measures for about 12 billion euros (15.3 billion US dollars), which we expect to impact positively in terms of about 0.4 percent of GDP next year".
The institute predicted exports to increase 2.1 percent in 2014, contributing 0.5 percent to the GDP between 2015 and 2016. Overall, Italy exports would "drift towards pre-crisis levels" in the next three years, but still lagging behind those of Germany and, surprisingly, Spain.
According to Prometeia analyst, in fact, Spanish exports benefit from "an improved ability of the country to attract foreign investments and a larger presence of medium-sized firms" that Italy still lacks.

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