(Bloomberg) -- Italy’s economy may still be able to achieve growth of as much as 1.4% this year as tourism helps offset German-led weakness in manufacturing, Finance Minister Giancarlo Giorgetti said.
“We’re continuing to be optimistic, and we’re continuing to believe in our capacity to astound international observers,” he said in an interview at the Italy Capital Markets Forum in Milan on Monday, citing his own target of growth in a range of 1.2% to 1.4%. “I believe we can achieve the numbers I’ve just mentioned.”
Such a performance would go beyond the 1% growth forecast cited in the budget and reiterated just last week by the Bank of Italy, reflecting how the euro zone’s third-biggest economy has been faring better than expected and boosting Prime Minister Giorgia Meloni’s government.
“What we’re certainly expecting is a slowdown in industry, because that’s very closely tied to trends in the German economy,” he said. “However services, in particular tourism in our view, will compensate this weakness in manufacturing.”
First-quarter growth was revised up in recent days, showing a 0.6% increase on the previous three months. Even so, a separate report showed inflation didn’t slow as much as anticipated in May, weakening to just 8.1% and significantly overshooting the 7.5% predicted by economists.
Better growth prospects could aid Italy in reducting its debt, which remains above 140% of output and is likely to stay little changed in the coming year, according to European Commission forecasts.
The government is seeking to be “prudent” with the public finances and isn’t currently planning to expand the deficit, Giorgetti said.
Global economic and geopolitical uncertainty and its fragile economy mean Italy remains in a precarious position with rating agencies scrutinizing its every move. Moody’s Investors Service chose not to issue a new assessment of the country last month but maintained its Baa3 rating, only one notch above junk, with a negative outlook.
--With assistance from Antonio Vanuzzo.
©2023 Bloomberg L.P.
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