OECD Upgrades Italy's Econ Outlook, 2010 GDP Now Seen +1.1%
MILAN -(Dow Jones)- Italy's economy is likely to grow 1.1% in 2010 and 1.5% in
2011, even as fiscal tightening begins next year, the Organization for Economic
Cooperation and Development said Thursday.
The revised forecasts are sharply better than the anemic 0.4% growth forecast
the OECD made for Italy last June. This year's contraction will also be only
4.8% compared with the 5.5% projected over the summer, the OECD said.
The OECD also expects Italian inflation, which has traditionally been notably
above the euro-zone average, to drop to the currency bloc's rate, meaning
Italy's Harmonized Index of Consumer Prices should rise 0.9% next year--compared
with a 1.5% forecast in June--and an even slower 0.8% in 2011.
Forces driving down inflation are a higher savings rate and weak wage trends
as more Italians lose their jobs, according to the details of the OECD's report.
Unemployment, whose rise in Italy has so far been curbed by short-week schemes
and other subsidized measures, will increase to 8.5% in 2010 and 8.7% in 2011,
from 7.6% in 2009, the OECD said.
Italian jobless figures can be slippery due to variations in the labor force.
For example, some 300,000 illegal immigrant household workers will join the
labor force as employees in the third quarter. But the OECD still expects the
total number of jobs to drop by 1% next year and by a further 0.3% in 2011.
The dismal outlook for jobs will also keep unit labor costs--a closely watched
measure of competitiveness--flat or even falling over the next two years after
rising at an average 4% annual rate from 2007 through 2009, according to the
OECD.
Such an adjustment has long been expected and while painful is timely as "
Italy's share in the volume of world trade had been falling faster than usual
since the onset of the crisis," the OECD said.
Still, the Paris-based organization adopted a rosier outlook on Italian
private consumption, which accounts for 59% of GDP.
Private consumption should contract 1.9% this year and grow 0.7% next year,
and then expand by 1.1% in 2011, according to the new forecasts. In June, the
OECD expected a sharper 2.6% contraction this year and flat consumption in 2010.
-By Christopher Emsden, Dow Jones Newswires; +39-02-58-21-99-05; chris.emsden@
dowjones.com
(END) Dow Jones Newswires
11-19-090515ET
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