Real GDP growth of 1.2 per cent is acceptable, taking account of the projected growth in nominal GDP, the variable most directly relevant for the public finances
The endorsement letter for the trend macroeconomic scenario issued on 15 September by the Ministry for the Economy and Finance and presented in the Update to the Economic and Financial Document (the Update) was published today on the website of the Parliamentary Budget Office (PBO). On 11 September the PBO issued its comments on a preliminary version of the trend forecasts. As required, the PBO will also assess the policy macroeconomic scenario published in the Update, which incorporates the effects of the upcoming budget measures.
The PBO Board endorsed the MEF’s trend forecasts for 2017-2018, which project real growth of 1.5 and 1.2 per cent respectively. The forecasts fall within a generally acceptable forecasting range, although the real GDP growth expected for 2018 is marginally higher than the upper bound of the forecasts of the PBO panel (which in addition to the PBO includes CER, Prometeia and REF.ricerche).
The overall assessment takes account of the fact that real growth is offset by a lower forecasts for the GDP deflator, especially in 2018. As a result, the growth forecast for nominal GDP, the variable most directly relevant for the public finances, lies within the range of forecasts produced by the PBO forecasting panel for both 2017 and 2018.
As regards the trend forecasts for 2019-2020 (which did not undergo the endorsement process), the MEF trend scenario expects real growth of 1.2 and 1.3 per cent, respectively. The PBO has greater concern about these figures: more specifically, the projections for GDP growth in 2020 are accompanied by a prevalence of negative risk factors. The forecast for an acceleration in the trend between 2019 and 2020 is exposed to considerable uncertainty, running partially counter to the developments in global output assumed in the international scenario.
