By Gavin Jones
ROME (Reuters) -Revisions to Italy’s economic and public finance data published on Friday offered little help to the government as it prepares a difficult 2024 budget.
The Treasury was hoping upward revisions to gross domestic product would provide a sufficiently positive carry-over effect on this year’s finances to make it easier to cut taxes while trimming the budget deficit, sources told Reuters this week.
However, the figures released by national statistics bureau ISTAT left the 2022 economic growth rate at 3.7% and also left the budget deficit unchanged at 8.0% of gross domestic product.
ISTAT also said any revisions to GDP data for the first and second quarter of this year are likely to be no more than marginal.
The Treasury will present new economic targets on Sept. 28 which will be the framework for next year’s budget.
The government currently forecasts GDP growth of 1.5% next year and a budget deficit at 3.7%, down from a targeted 4.5% this year.
Sources have told Reuters the 2024 growth estimate will be cut, while the deficit target may be revised up.
ISTAT on Friday sharply increased the 2021 growth rate to 8.3% from 7.0% reported in April, representing a stronger than previously estimated rebound from the COVID-19 pandemic. The deficit-to-GDP ratio for that year was trimmed to 8.8% from 9.0%
The revisions, going back to 2019, are part of ISTAT’s standard data release calendar and reflect the arrival of more complete economic data.
The increase in nominal GDP lowered the debt-to-GDP ratio for 2021 and 2022, with last year’s ratio coming in at 141.6% of GDP versus the previous estimate of 144.7%.
However, a positive impact on the deficit-to-GDP ratio last year of about 0.2 percentage points was cancelled out by higher than previously estimated government spending on incentives for energy-saving home improvements, ISTAT said.
Overall, last year Italy spent around 2.8% of GDP, or around 54 billion euros, on the incentives, in the form of tax credits.
The extent to which these incentives continue to weigh on public accounts this year and next will partly depend on an upcoming ruling by Eurostat regarding how they should be factored into deficit calculations.
On Oct. 4, ISTAT will publish second quarter deficit data, after the first quarter showed an increase in the deficit to 12.1% of GDP.
(Reporting By Gavin Jones; Editing by Toby Chopra)
