ASSESSMENTS

As Italy's Economy Weakens, the Stakes for the Eurozone Rise

Feb 6, 2019 | 20:26 GMT

Deputies attend a session for a Parliament vote of confidence on Italy's revised 2019 budget, on December 29, 2018 in Rome.

Members of Italy's Parliament gather in Rome to hold a vote on the country's revised 2019 budget on Dec. 29, 2018.

(ALBERTO PIZZOLI/AFP/Getty Images)

Highlights

  • A combination of domestic and external forces will continue to slow Italy's economy in 2019, resulting in a lower-than-expected GDP expansion in the third largest economy of the eurozone.
  • The European Union and financial markets will increase pressure on Rome to correct some of its expansionary policies to avoid a worsening of its deficit.
  • Two events in 2019 could lead to the collapse of Italy's coalition government: the elections for the European Parliament in May, and Rome's negotiations with Brussels over the 2020 budget in October. 

2019 will be a year marked by a weakening economy and growing political uncertainty in Italy. In December 2018, Italy's coalition government convinced the European Union it would implement an expansionary budget while keeping the country's deficit at 2 percent of gross domestic product (GPD). This promise was based on expectations of economic growth that were ambitious even then, but seem increasingly unlikely now. ...

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