Italy presents conservative economic plan amid political deadlock

[April 26, 2018]  ROME (Reuters) - Italy's caretaker government on Thursday passed its latest multi-year economic plan, confirming most of the forecasts made in September as political parties have been unable to form a new government since last month's inconclusive election.

Speaking after a cabinet meeting, Economy Minister Pier Carlo Padoan said gross domestic product (GDP) would rise 1.5 percent this year, the same rate as last year.

He said the forecast was "prudent" even though much recent economic data has pointed to a slowdown, including monthly drops in industrial output in January and February.

The Economic and Financial Document (DEF) had to be sent to Brussels, which reviews it, this month.

Since the March 4 national election ended with a hung parliament, the Democratic Party (PD), which heads the caretaker government, passed the DEF.

At the vote, a center-right alliance led by the anti-immigrant League won the most seats, and the anti-establishment 5-Star Movement emerged as the biggest single party. The center-left PD came in a distant third.

Whatever new government emerges, the DEF's forecasts may be changed in September, just before Italy, which has the second-largest debt-to-GDP ratio in the euro zone after Greece, presents its draft 2019 budget.

 Italian Economy Minister Pier Carlo Padoan arrives at G-20 plenary during the IMF/World Bank spring meeting in Washington, U.S., April 20, 2018. REUTERS/Yuri Gripas

The budget deficit will decline to 1.6 percent of GDP this year, down from 2.3 percent last year, Padoan said, also in line with the previous target.

In 2019, GDP growth in the euro zone's third-largest economy is seen slowing to 1.4 percent, with growth projected at 1.3 percent in 2020.

Debt is seen falling to 130.8 percent of GDP this year, down a percentage point from 2017, but up from the previous forecast of 130.0 percent. It will fall to 128.0 percent in 2019, according to the DEF.

(Reporting by Massimiliano Di Giorgio; Writing by Steve Scherer; Editing by Jon Boyle)

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