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MILAN (Reuters) – Italy can not afford a fiscal expansion while its economic growth is almost nil, said Sunday Treasury Minister Giovanni Tria.
Tria said that Italy was experiencing a downturn and that it could not consider introducing restrictive measures. He was speaking at a conference in Florence and his remarks were echoed by Italian radio stations.
"Of course, we do not have room for expansion measures," he added.
Rome targets a budget deficit of 2.04% of gross domestic product this year, but with slowing economic growth, many badysts expect a higher figure unless further tightening measures of the belt not be adopted.
The Coalition Government of the Five-Star Anti-Settlement Movement and the Right League have lowered the deficit target after a protracted fight with the European Commission.
Last Thursday, Claudio Borghi, a leading member of the League party, said the government could sharply increase the deficit next year to avoid raising the value – added tax.
Tria said that with the slowdown in the German economy, exports of Italian manufactured goods had suffered.
The Italian economy has for years experienced average growth one point lower than the European average and "we are moving towards zero," he said.
But the minister said no one was asking the government to take corrective action to offset the slowdown in growth and added that he had dismissed them.
In February, the European Commission stated that Italy was facing excessive economic imbalances and that its government's policies aggravated the situation and posed a threat to other euro area countries.
(Report by Stephen Jewkes, edited by Susan Fenton)
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