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ROME (Reuters) – Italy’s economic growth last year was weaker than previously estimated but, more positively for the government, the budget deficit and public debt as a proportion of output were also revised down, national statistics bureau ISTAT reported on Monday.
The revisions somewhat ease the pressure on Prime Minister Giorgia Meloni as she prepares a 2025 budget that must sharply cut the deficit to meet Rome’s commitments to the European Union.
The revisions may mean that a previously projected increase in the debt-to-GDP ratio over the next few years can now be avoided, a government official said, asking not to be named.
ISTAT slightly revised down the 2023 budget deficit to 7.2% of gross domestic product (GDP) from a 7.4% estimate made in April, which was the highest in the euro zone.
Italy, which in June was put under a so-called Excessive Deficit Procedure by the EU, has targeted the deficit to fall to 4.3% of GDP this year and continue declining to 3.6% in 2025 and 2.9% the year after.
ISTAT revised the 2023 level for the public debt to 134.6% of GDP from 137.3%. Italy’s debt is proportionally the second highest in the euro zone after that of Greece.
The revisions were part of an annual review of Italy’s GDP statistics that ISTAT carries out every September. This year the exercise also entailed a change in the base year for GDP growth data to 2021 from 2015.
The level of GDP in 2023 was raised by 46.6 billion euros ($51.69 billion) to 2.13 trillion euros.
However, due to revisions to previous years’ data, the 2023 growth rate was revised down to 0.7% from 0.9% previously reported.
The statistics office also revised the country’s GDP, deficit and debt figures for 2022 and 2021.
Growth in 2022 was raised to 4.7% from 4.0% previously. The budget deficit was lowered to 8.1% of GDP from 8.6%, while the debt was revised down to 138.1% from 140.5%.
Due to the upward revisions to gross domestic product covering several years, Italy’s GDP at the end of 2023 was for the first time higher than its level before the 2008 financial crisis, ISTAT said.
The Italian Treasury, which was due to draw up a multi-year budget plan last week, decided instead to wait until the publication of ISTAT’s revisions to see what impact they would have on public finances.
The plan needs to be sent to Brussels by early October, after approval by the government and parliament.
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(Reporting by Gavin Jones, Valentina Consiglio and Antonella Cinelli, Giuseppe Fonte, writing by Gavin Jones)