Italy’s Istat, National Institute of Statistics, revised down both 2018 and 2019 GDP growth forecasts. For 2018, growth is projected to be at 1.1%, down from May’s forecast of 1.4%. For 2019, growth is projected to be at 1.3%. Istat noted that “this projections take into account the less favourable international framework and the expansionary fiscal policies implemented in the 2018 Budget Law.”
Istat’s forecast for 2019 is notably lower than the coalition government’s overly optimistic 1.5%. But it’s higher than European Commission’s 1.2% and IMF’s 1.0%. GDP forecast is a key figure in Italy’s draft budget plan. European Commission is expected to publish a report formally starting the so called Excessive Deficit Procedure against Italy today.
Ahead of that Euro is lifted mildly while Italian yield dips on news that Deputy Prime Minister Matteo Salvini may be open to reviewing its 2019 budget. The La Stampa daily said he’s ready to lower planned spending on a citizens’ income and the unwinding of a previous pension reform. But it also be noted that League, which Salvini heads, is just part of the coalition. Five Star Movement Luigi Di Maio has to agree to Salvini’s idea, if the plan is to be revised.
Quite update on this: Reuters then reported, quoting an unnamed governmetn source that “The League rules out revising the fiscal plan.”
Italian 10 year yield is currently down -0.087 at 3.530. German 10 year yield is up 0.016 at 0.371 at the time of writing. That, is, German-Italian Spread is still above 300 at 315. Not much to cheer yet.
