MNI: Bank of Italy Ups 2018-2020 Italy GDP Forecasts

By Silvia Marchetti

     ROME (MNI) - The Bank of Italy on Friday upped it economic growth forecasts

fro Italy to 1.4% this year and to 1.2% in 2019 and 2020.

     In its quarterly Economic Bulletin the central bank warned however that

growth consolidation was tied to the government pursuing fiscal targets and

market-friendly measures.

     "This forecasting scenario assumes that financial conditions continue to be

accommodative,", the BOI said, through "policies capable of fostering long-term

economic growth by supporting investment and consumption choices, while also

lending credibility to public debt reduction objectives".

     In its July bulletin, this year's GDP was seen at 1.3%, while 2017 growth

was forecasted at 1.4%. It has now been revised to 1.5%.

     According to the central bank, the main downside risks to the ongoing

recovery primarily stem from global conditions.

     "An intensification of geopolitical tensions or greater uncertainty

surrounding the future course of international economic policies could translate

into higher volatility in the financial markets and in risk premiums, with

adverse repercussions on the euro-area economy," the bulletin said.

     The BOI stressed that the European Central Bank's monetary conditions would

thus "remain very accommodative into the future, as this is necessary to secure

a sustained return of inflation rates towards levels that are below, but close

to, 2%".

     Italy's overall economic outlook is rosier. Unemployment is down to 11% and

consumption rates have risen.

     Risks connected to the banking system have decreased, as lending to the

private sector continues to grow and credit quality further improves.

     The ratio of new non-performing loans (NPLs) to outstanding loans fell to

1.7% in 2017, added the bank, below the levels recorded before the global

crisis. The improvement is mainly due to the completion of transactions for the

sale of bad loans by leading banks.

     Exports are also on the rise. Italy's current account surplus remains

large, 2.8% of GDP in 2017, said the central bank, thus contributing to the

improvement in the country's debtor position, down to 7.8% of GDP.

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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