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ROME, September 28 (Reuters) – Italy is forecasting economic growth of 6% this year after the record decline of 8.9% in 2020, two government sources said on Tuesday, while the budget deficit rose to 9.5% of gross domestic product (GDP ) is aligned. .
The forecast for GDP growth of 6% is an upward revision from a projection of 4.5% made in April, while the new deficit target of 9.5% represents a significant reduction from the previous estimate of 11.8%.
The lower deficit will push Italy’s debt ratio below its previous target of 159.8%, but will still be above the 155.6% level in 2020, marking a new post-war record, the sources said.
They were not immediately able to specify the new target, but they said the debt would follow a downward trend for the next several years.
The new forecasts were agreed on Tuesday at a meeting of key coalition figures and will be formalized in the government’s bi-annual Economic and Financial Document (DEF), which is due to be approved by the cabinet on Wednesday.
The DEF will set new economic and public finance targets for 2021-2024.
Economy Minister Daniele Franco said at the meeting on Tuesday that DEF projections would allow for additional spending of up to 1 percent of GDP, or around € 16 billion, between 2022 and 2024, sources present at the meeting said.
The document will set the framework for Rome’s 2022 budget, due to be presented in mid-October.
The DEF is targeting GDP growth of more than 4.5% in 2022, one of the sources said. Rome set a target of 4.8% in April. (Reporting by Giuseppe Fonte, editing by Gavin Jones)