Italy sees sharp growth, large budget deficit

Italy, among the countries worst hit by the coronavirus pandemic, expects to run a large budget deficit this year but it will help fund strong growth in 2021, the government's outlook showed Tuesday, October 6.

This year's budget deficit, the shortfall between government revenues and spending, will come in at 10.8% of gross domestic product (GDP), falling to 7% next year.

Prime Minister Giuseppe Conte's Cabinet signed off on the budget outlook in the early hours of Tuesday.

Having suffered nearly 36,000 coronavirus deaths, Italy should see the economy grow a sharp 6% in 2021, helped by a more than 200-billion-euro European Union-backed aid package, it said.

Growth in 2022 will ease back to 3.8%, followed by 2.5% in 2023, it added.

Bank Intesa Sanpaolo said in a note there had to be doubts about such "optimistic" figures.

The government has unveiled plans for a massive modernization program to put the economy on a firm foundation after years of languishing in the doldrums, made worse by the near-complete shutdown during the worst of the coronavirus outbreak earlier this year.

Conte says some 37% of the funds will go into Green projects, as sought by Brussels, to pave the way for a more sustainable economy less dependent on traditional fossil energy sources. –