IMF raises Italy's 2015 growth forecast

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The IMF has upped Italy’s growth forecast for 2015. Economy: Shutterstock
10:53 CEST+02:00
The International Monetary Fund (IMF) on Monday upped Italy's 2015 growth forecast.

The IMF said the eurozone's third largest economy was now tipped to grow 0.7 percent this year, raising its initial forecast by 0.2 percent and bringing it into line with the government's official forecast.

The organization also raised its 2016 forecast from 1.1 percent to 1.2 percent.

The revised forecast came the same day Istat, the national statistics agency, announced that Italian exports were up by 9.2 percent in March compared to the same month in 2014, mostly driven by demand from outside the EU.  

However, the IMF said more needed to be done to tackle the country's towering unemployment and debt.

"Italy's economy is emerging slowly from a painful recession," it said in a report, following the news this month that the country had finally rebooted its economy after nine months of recession and zero growth in the last quarter of 2014.

"Supported by stronger exports and higher spending by firms and consumers, growth is projected at 0.7 percent this year and 1.2 percent next year," the IMF said.

"But much higher growth is needed to bring down unemployment and debt at a faster pace," it added.

Italy's unemployment rate rose to 13 percent in March, with youth joblessness up to 43.1 percent -- compared to a 22.7 percent rate in the eurozone.

Italy, which only this month emerged from the deepest recession since World War II, had pledged to lower its budget deficit from 3.0 percent to 2.6 percent of GDP in 2015.

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But that promise could be hard to keep now that the government has been forced to pay out over €2 billion to pensioners following a court order.

The rebate, which will see over four million retirees receive €500 each on August 1st, will be funded by money originally set aside for measures to ease poverty. 

At the start of May, Italy's constitutional court overturned a key plank of the country's pension reforms, leaving the government facing a mammoth adjustment estimated by premier Matteo Renzi to total €18 billion.

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