Italy’s Giovanni Tria sees stagnation, not recession

Italy’s economy is probably in a phase of stagnation not recession, Italian Minister of Economy and Finances Giovanni Tria said in a newspaper interview, adding that the country’s deficit would be kept under control.

The EU fiscal rules are wrong and need to be changed to boost economic growth, Tria also said in the interview with Corriere della Sera published on Sunday.

“I don’t see a recession. I see a situation of stagnation,” Tria said.

It would be necessary to wait for the Jan. 31 release of the GDP numbers for the final three months of last year to be sure, he added.

The economy contracted 0.1 percent in the third quarter, and further shrinkage in the last quarter would signal a recession.

A 1.6 percent decline in industrial production in November, in data released on Friday, was the latest piece of negative economic data.

Italy is committed to cutting its debt and keeping the deficit under control, Tria said, adding that he is hoping for an economic pickup in the next two or three years, despite forecasts to the contrary.

He said there had been differences of opinion within the government on how to target this year’s spending gap.

The populist coalition eventually agreed to a reduced deficit target of 2.04 percent of GDP for this year, after the EU rejected the initial goal of 2.4 percent.

“I was of the opinion that we had to maintain a more contained deficit,” Tria said.

“Then the economic situation got worse in Europe and in Italy,” he added.

The Italian government understands the conditions needed to make a deal on the budget, while a conflict between Italy and the EU is resolved “for now,” Tria said.

Economists predict that two of Europe’s largest economies dodged recessions at the end of last year, with growth likely to rebound after a previous quarter of contraction.

Bloomberg’s latest monthly surveys forecast that German growth reached 0.4 percent in the fourth quarter of last year, despite worrying signals from an industrial shock.

Italy would also avoid a technical recession, although it barely eked out any growth in the period — just 0.1 percent.