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Italy's growth level still unsatisfying, says minister

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Staff Writer | April 21, 2017
Italy's economy has stayed on a recovery path over the last four years, but its level of growth is far from satisfying, Italian Finance Minister Pier Carlo Padoan said.
Italy economy
Europe   The emergency cuts were necessary
The official made his remarks during a senate committee's hearing on the 2017 budget blueprint approved by Cabinet last week.

"2017 is the fourth consecutive year of growth. Yet, the level of growth achieved does not thrill us: we cannot count ourselves satisfied," Padoan said.

He added that the recovery had so far been "weak and gradual, due to structural limits" and unemployment was still too high in the country and "unacceptably high" among youth.

In February, the jobless rate was 11.5 percent, and 35.2 percent among people aged 15 to 24.

According to the minister, changing the current situation would require a growth-oriented fiscal policy through decreasing taxes, a supportive framework for investments, and structural reforms.

"This goal must be pursued within a context of structurally decreasing public debt," Padoan stressed.

As such, Italy would only have "a narrow path" to move along, he said.

The parliament began discussing the annual planning blueprint this week, after extra budget deficit cuts were passed by Prime Minister Paolo Gentiloni's center-left government on April 11.

The emergency cuts - worth some 3.4 billion euros ($3.6 billion), or 0.2 percent of GDP - were necessary to dodge an infringement procedure over excessive deficit by the European Union (EU), and will need the parliament's approval by the end of April.

The Italian deficit is actually largely below the ceiling of 3.0 percent of gross domestic product (GDP) required by the EU.

It is expected to decrease to 2.1 percent this year (from a previous 2.3-percent forecast), and to drop to 1.2 percent in 2018, according to government figures that comprised the latest cuts.

However, Italy also has the third largest public debt in the eurozone after Greece and Portugal, according to the EU statistical office, Eurostat.

EU countries are obliged to keep their debts under control, and gradually reduce them towards the ceiling of 60 percent of GDP, since after the European debt crisis.

Italy's debt was 132.5 percent of GDP this year from 132.6 percent in 2016, and would fall to 131.0 percent in 2018, the government's latest projections showed.

As a result, Padoan warned Wednesday that the country should not revise its ongoing policy of consolidation.

"A U-turn in the policy of fiscal consolidation would be counterproductive. It would represent a ruinous choice for the country, and especially for the weakest sections of society," he said.