OECD revises down Italy GDP forecasts, issues budget warning

'Further fiscal tightening' may be needed in 2014

OECD revises down Italy GDP forecasts, issues budget warning

Paris, November 27 - The OECD on Tuesday said it had revised down its growth forecasts for Italy for this year and next and it warned that additional budget tightening may be needed in 2014. The OECD said it expected Italy's gross domestic product to fall 2.2% this year and 1% in 2013, compared to May forecasts of contractions of 1.7% and 0.4% respectively. It said "weak growth will put further downward pressure on employment, wages and consumer prices". Premier Mario Monti's emergency technocrat government has introduced painful austerity measures of tax hikes and spending cuts since coming to power last year to put Italy on course to balance the budget in structural terms next year. But the OECD said more may soon be needed, if its growth forecasts are right. "Should the OECD projection be realised, further fiscal tightening in 2014 would be necessary to achieve the planned debt reduction path," the OECD said in its economic outlook report. The Paris-based organisation praised the structural economic reforms Monti's government has introduced but stressed that they "must be fully and consistently implemented if they are to produce results".

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