Italy’s outgoing government slashes 2023 growth forecast to 0.6%

By Giada Zampano

ROME - Italy’s outgoing government slashed its forecast for 2023’s gross domestic product, saying it will grow 0.6% from a previous target of 2.4% because of the deterioration in the global economic outlook sparked by the energy crisis.

In an economic and financial document approved Wednesday by the Cabinet, the government outlines the framework for the 2023 budget law, which needs preliminary approval by the European Union.

It said Italy’s 2023 budget deficit, a closely-watched figure, is seen at 3.4% of national output, down from a previous estimate of 3.9%.

For 2022, the Italian economy is projected to expand by 3.3%, slightly more than the 3.1% previously targeted, thanks to the higher-than-expected growth registered in the first six months. The budget deficit is set to reach 5.1% in 2022, below the previous estimate at 5.6%.

The new forecasts unveiled by the outgoing government led by Mario Draghi, however, reflect a prudential approach and do not include economic measures that will be adopted by the incoming government -- likely led by far-right leader Giorgia Meloni, after a sound victory in Sunday’s national elections.

One of the first challenges facing the new Cabinet will be drafting the 2023 budget law, including effective measures able to help families and businesses hit hard by rising inflation and energy prices, without blowing up public finances.