EU MORE UPBEAT ON ITALIAN ECONOMY

EU MORE UPBEAT ON ITALIAN ECONOMY

(ANSA) - Brussels, November 3 - The European Union is more upbeat about the Italian economy and on Tuesday the European Commission issued a new forecast which predicted ''moderate growth'' next year and in 2011.

In its latest forecast, the EC said Italy's GDP this year would fall by 4.7%, to then rise by 0.7% in 2010 and 1.4% in 2011.

These figures were in line with the new ones for the euro zone where GDP is now expected to fall by 4% this year and then climb by 0.7% in 2010 and 1.5%.

Looking at the deficit, for which procedures were opened last month against Italy and eight other EU members, the EC calculated that it will be 5.3% of GDP this year and next to then decline to 5.1% in 2011.

In the euro zone the budget deficit is expected to be 6.9% in 2010 and 6.5% in 2011.

The EU executive observed that Italy's finances remained compromised by its ''extremely high public debt'', third highest in the world after the United States and Japan, which will rise to 114.6% of GDP this year, 116.7% next year and 117.8% in 2011.

Italy's high budget deficit, the EC observed, was only in part caused by this year's recession and was for the most part due to structural factors, including interest payments on the public debt, which is far outside the limits set by the euro Stability and Growth Pact (SGP).

The EC last month opened excessive a deficit procedure (EDP) against Italy, Austria, Belgium, Czech Republic, the Netherlands, Portugal and Slovenia because the fact that their planned deficits for 2009 were over the SGP threshold of 3% was neither exceptional nor temporary in nature.

Earlier this year the EC opened EDP against nine members which had excessive deficits already in 2008: France, Greece, Ireland, Latvia, Spain, Lithuania, Malta, Poland and Romania.