ROME, April 9 (Reuters) - Italy expects slower GDP growth due to temporary factors, Economy Minister Giancarlo Giorgetti said on Thursday. Giorgetti told parliament Rome was preparing to cut its
Italy sees slower GDP growth due to high energy costs, economy minister says
By Giuseppe Fonte and Angelo Amante
Italy’s Economic Outlook and Government Response
Revised GDP Growth Estimates
ROME, April 9 (Reuters) - Italy is preparing to cut its GDP growth estimates to factor in the negative impact of rising energy prices, Economy Minister Giancarlo Giorgetti said on Thursday.
Sources told Reuters the government would cut its estimate for this year's growth to 0.5% or 0.6% from a current 0.7% target, and lower next year's outlook to 0.6% or 0.7% from 0.8%.
Impact on Budget Deficit Targets
The darkening prospects will make it more difficult for Italy to bring its budget deficit below the EU's 3%-of-gross domestic product-ceiling this year from 3.1% in 2025, as agreed with European Union authorities.
Minister’s Comments on Growth and Economy
"Downward revisions to growth forecasts are limited and are mainly attributable to external and temporary factors, primarily the energy crisis," Giorgetti said. Recent data did not point to a structural deterioration in the Italian economy, he added.
Italy is due this month to update its public finance and GDP growth estimates for 2026 and the following years.
Budget Framework and EU Rules
Conservative Assumptions in New Budget
Asked about the risk of exceeding the 3% deficit limit this year, Giorgetti did not answer directly, but told reporters the government would set conservative assumptions in its new budget framework.
"Let's remain cautious, as always," he said.
Potential Suspension of EU Deficit Rules
Giorgetti added that European Union authorities should consider a temporary suspension of its budget deficit rules if the U.S.-Israeli war against Iran flares up again.
The EU activated between 2020 and 2023 a 'general escape clause' to suspend budget rules and allow member states to respond to the COVID-19 pandemic.
Conditions for Escape Clause Activation
That clause, however, can be tapped only in the event of a severe economic downturn in the euro area or the EU as a whole, something which is not currently expected by leading forecasters.
Italy’s Current Fiscal Constraints
EU Infringement Procedure and Relief Measures
Italy is currently under an EU infringement procedure for its excessive deficit (EDP), limiting leeway to adopt relief measures for families and firms hit by higher energy bills.
National Escape Clause and Parliamentary Decisions
Rome could also activate a national escape clause allowing member states to deviate from budget goals to boost defence spending or in response to exceptional circumstances outside their control, but the government has so far ruled out doing so as long as Italy is under EDP.
"Should the conditions for exiting the procedure not be met, the resulting decisions would be referred to Parliament," Giorgetti said in reference to tapping the national escape clause.
(Editing by Gavin Jones and Elaine Hardcastle)
