Bank of Italy slashes 2014 GDP forecast to 0.2% from 0.7%
That might be a big chunk of the reason for the drop in the euro.
- Sees risks to the downside on that forecast as well
- Sees Q2 GDP “Approximately stationary”
- GDP forecasts assume coherent implementation of measures to support growth and recovery in eurozone
- Should not underestimate the risks from emerging market economies and a financial market downturn
- Geopolitical risks connected with oil producing countries have risen which could affect energy prices
Market estimates GDP +0.1% for Q2 and Q1 was -0.5%, so they’re priming for a big miss and a continuation of the recession
- Sees 1.3% growth in 2015 (consensus is 1.0%, their previous forecast was 1.0%)
- Sees 0.4% inflation in 2014 and 0.8% inflation in 2015
- Says government needs to boost reform efforts to finally exit recession
On seeing the news our very own Adam Button said;
“There were rumors of the downgrade earlier in the week but it’s a bit of a surprise to see such a dramatic cut from the January forecast. The consensus is 0.3% and official forecasts always tend to be a tough stronger than private forecasts.”
Overall, a dour view from Italy.