Bank of Italy Forecasts Growth of just 0.2% for 2014; Geopolitical Concerns

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The Bank of Italy on Friday forecast that the Italian economy will grow just 0.2% this year and expressed concerns about the effects of international "geopolitical tensions" on the recovery amid conflict in Ukraine.
The government has forecast that Italy's gross domestic product will increase by 0.8% this year.
But that may turn out optimistic as the country is struggling to recover from its longest postwar recession - its second downturn since the start of the global economic crisis in 2008.
In its economic bulletin, the central bank predicted "moderate recovery, not without significant uncertainties...with GDP growing at about 0.2% on average this year, with risks of that being revised down".
It forecast growth of 1.3% for Italy next year.
The bank added that inflation would stay very low - which many economist see as a worrying sign for the economy as it suggests weak demand - at 0.4% this year, before rising to 0.8% in 2015.
It also said it did not see credit easing up significantly, which is bad news, as the recovery will be hampered if households and firms have trouble getting loans. "There are signs of improvement in credit conditions, but these are still marginal and uncertain," the report read.
"The most recent surveys show an attenuation in the difficulties in accessing bank credit... but loans to the private sector continue to fall, in part due to the effects of the weak outlook". The bulletin added that "the uncertain development of the crisis" and "geopolitical tensions" could hit growth prospects.
The report talked of possible impacts on "energy products" - an apparent reference to Ukraine, through which energy supplies from Russia to Europe pass./ansa/
Bank of Italy Forecasts Growth of just 0.2% for 2014; Geopolitical Concerns Bank of Italy Forecasts Growth of just 0.2% for 2014; Geopolitical Concerns Friday, July 18, 2014 Rating: 5
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