Italy: The elections issue

By January 12, 2018 April 25th, 2018 No Comments

Elections will take place on the 4th of March so we provide a first assessment of the post-election “world”. #ChangingEurope We reiterate that a centre-right or an M5-led government are the most likely outcomes of the coming elections. That means the next government will be euro-sceptic. That is an important development for the long term, but not one that will affect the economic outlook of the economy for 2018/19. In our view a centre-right government is likely to push real GDP growth to 3% by 2019, keeping the budget deficit close to 3% of GDP and the debt to GDP ratio on a downward path. An M5-government instead is likely to deliver a slightly more modest growth profile in 2018/19E, but paradoxically also a smaller budget shortfall. In all realistic scenarios Italy will continue to see brisk growth, rising inflation and a lower debt burden for as long as the global economy remains strong. #ChangingItaly

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