ROME, Sept 23 (Reuters) – Italy’s outgoing Prime Minister Mario Draghi’s government is set to lower its growth forecast for 2023 to just over 0.5% due to the impact of the energy crisis which weighs on the third economy of the euro zone, learned Reuters from sources familiar with the matter.
The Italian Treasury expects gross domestic product (GDP) growth of 3.3% to 3.4% for this year, while a forecast set last April was for growth of 3.1%.
For next year, the government expects GDP growth of 0.6% to 0.7%, well below the previous forecast of 2.4%, two sources said, while warning that these forecasts were still subject to change given economic uncertainties.
Mario Draghi has already released some 66 billion euros since January to mitigate the impact of soaring electricity and gas prices on households and businesses.
As early legislative elections are held on Sunday, his successor to the presidency of the Council will probably have to follow the same path.
Last week, Economy Minister Daniele Franco confirmed the budget deficit target at 5.6%.
Weaker growth forecasts for 2023 should push the deficit target for next year above 3.9%, as currently forecast.
The new growth forecasts are due to be announced on September 27.
These forecasts are based on an unchanged policy scenario as Mario Draghi leaves it to the next government to set more ambitious targets before the 2023 budget is presented to Brussels and the Italian Parliament.
The government must send its draft budget to Brussels by mid-October for validation, but the formation of a new government could delay its implementation.
The far-right candidate for the legislative elections, Giorgia Meloni, the favorite of the ballot, provides in her 2023 budget for significant tax cuts to revive growth, according to her economic adviser.
At the end of August, in an interview with Reuters, Giorgia Meloni declared that she would respect the budgetary rules of the European Union and that she would not derail public finances.
As inflation in the euro zone approaches 10%, the European Central Bank (ECB) made two rate hikes in July and September and promised to do more, making it more difficult to target the Italy to avoid recession and reduce public debt.
The retirement age is one of the challenges that the next government will have to tackle. He must be 67 on January 1, instead of 64, but Matteo Salvini, the leader of the League and ally of Giorgia Meloni, wants to abolish this reform dating from 2011. (Report Giuseppe Fonte, French version Matthieu Protard, edited by Tangi Salaün)