Italy will struggle to achieve the growth rate that the anti-establishment government has planned for 2019, according to Morgan Stanley.
In its latest 2019 budget draft plan, Rome forecasts a growth rate of 1.5 percent for 2019 — compared to Morgan Stanley’s latest forecast of just 0.5 percent for gross domestic product (GDP) next year. The figure showing the investment bank’s forecast is only one-third of the Italian government’s own estimate.
“We expect a contraction in economic activity towards year-end, mainly driven by domestic demand, both consumer spending and business investment,” the bank said in its European Economic Outlook note, published this week.
“Further out, the fiscal boost to growth will probably have some beneficial effects on consumption. But it’s unlikely to be so big as to result in an improvement of the public finances,” the note added.
The Italian government expects increased spending on infrastructure projects and providing people with more income will revive the subdued Italian economy.
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