Italy's economy will shrink in 2014 for a third year running, while the public debt will continue to rise, the International Monetary Fund said on Thursday, calling on Matteo Renzi's government to follow through on promised reforms. Gross domestic product will fall this year by 0.1 percent following declines of 1.9 percent in 2013 and 2.4 percent in 2012, the IMF said, cutting its previous forecast for growth of 0.3 percent, made at the end of July.
The IMF, whose forecasts on Italy have been consistently too optimistic in recent years, forecast that next year Rome will see growth of 1.1 percent - unchanged from its previous estimate - thanks to an improvement in credit conditions and the effects of easing measures by the European Central Bank. However, the IMF mission chief for Italy said Italian data since the estimates were compiled had been disappointing, so downward revisions for both this year and 2015 can be expected when the fund issues its next round of forecasts in October. "Recent data has been softening and it does point to downside risks ... we are in the process of revising our forecasts," Kenneth Kang told reporters in a conference call. Italian growth has averaged around zero since 2000 and has reached one percent only once in the past five years.