Italy plans to maintain forecasts for GDP growth of 0.6% this year and 0.8% in 2026 in the budget plan to be announced in the coming weeks, Economy Minister Giancarlo Giorgetti said on Sunday, despite uncertainties linked to US import tariffs.
The government estimates for growth in gross domestic product were first made in April, and Giorgetti said they had already accounted for the potential impact of shifting trade conditions on the euro zone's third-largest economy.
"We feel confident in confirming GDP estimates for these years," Giorgetti told a political event in Rome. "We had already factored in the impact of the trade war and everything that came with it."
Italy's economy contracted by 0.1% in the second quarter from the previous three months due mainly to negative trade flows. However, industrial output rose by 0.4% in July from the previous month, giving some sign of vitality for the long-struggling manufacturing sector.
The government will present updated GDP forecasts and multi-year budget targets to parliament by Oct. 2. They will form the framework for next year's budget.
Giorgetti said no further fiscal tightening would be needed to bring Italy's deficit below the European Union's 3% of GDP ceiling next year, laying the groundwork for the country to exit the EU's infringement procedure. He said in July that Italy could cut the deficit below 3% this year.
Being subject to the bloc's so-called excessive deficit procedure reduces countries' room for maneuver on tax and spending because EU rules oblige them to cut their deficits by a prescribed amount each year.
Giorgetti reiterated government pledges to ease the tax burden on middle-income families, without saying how that might be financed.
His co-ruling League party wants national banks to contribute more than 1 billion euros ($1.17 billion) to the government's 2026 budget, sources said late last week.
