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Italy defiant after IMF slashes growth forecasts

The Italian government was defiant after IMF revised down GDP growth forecasts yesterday, saying Italy is a not a risk factor for the global economy - but the IMF's own policies are.

Italy defiant after IMF slashes growth forecasts
IMF Managing Director Christine Lagarde gives a press conference ahead of the World Economic Forum yesterday in Davos, Switzerland. Photo: Fabrice COFFRINI/AFP

The International Monetary Fund said it had revised down its 2019 GDP growth forecast for Italy 0.6 percent, down from the one percent it predicted in October

The prediction is in line with a similar reduction in forecast by the Bank of Italy last week.

“We have revised downwards our forecasts for advanced economies slightly, mainly due to downward revisions for the euro area,” the IMF said.

The IMF said Italy's financial situation was one of the biggest risk factors for the global economy.

“In Europe the Brexit cliffhanger continues, and the costly spillovers between sovereign and financial risk in Italy remain a threat,” the IMF said in an update of its World Economic Outlook.

READ ALSO: Italy must 'play by the rules' on budget: IMF chief

But the Italian government ministers hit back at the IMF's statement.

Italy is a not a risk factor for the global economy but the IMF's own policies are, Italy’s Finance Minister Giovanni Tria reportedly said.

Photo: AFP

His words were echoed by Italian Deputy Prime Minister and Interior Minister Matteo Salvini.

“Is Italy a threat and a risk for the global economy? On the contrary, the IMF is a threat to the worldwide economy, with its recent history of economic recipes featuring mistaken forecasts, few successes and many disasters,” Salvini told reporters in Rome.

Co- Deputy Prime Minister Luigi Di Maio said the International Monetary Fund's listing Italy and Brexit as global growth threats “does not discourage us” and there is “no turning back” on economic policy.

“The European Commission president has already replied to the IMF saying they were wrong to trust the IMF on Greece with austerity,” he said.

He said “there's no turning back” after the approval of the country’s new anti-austerity budget last week, which includes a revised welfare and pension system.

“We are creating a new welfare state: we're aren't turning back, vis-a-vis people who actually define Italy as one of the causes of the economic recession. We can't accept it…If they think they can discourage us with some figures they're wrong.”

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For members

MONEY

EXPLAINED: How to get your €200 cost of living bonus in Italy?

The Italian government is sending one-off €200 payments to cushion the rising cost of living, but they will not be automatic. Here is how to receive your compensation.

EXPLAINED: How to get your €200 cost of living bonus in Italy?

The €200 cost of living bonus was announced in May 2022, alongside several government measures aimed at offsetting the increasing cost of living, as The Local reported.

Employees, as well as the self-employed, pensioners and the unemployed, will be eligible to receive the €200 payment if they have an annual income of under €35,000 gross, according to a decree law passed in May.

However, the bonus is only automatically made to those who are state employees or pensioners. Those in these categories will be identified by the Ministry of Economy and Finance and INPS and receive €200 along with their salaries or pension payments.

What if I work in the private sector?

Employers working in the private sector should receive their payments in their July pay packet. First, however, they need to submit a self-declaration to their employer, who will pay the sum with the July pay check and then recover the funds from the state later.

The decree doesn’t specify a deadline for the submission, but as the payments should be made in July, the paperwork needs to be filed before that – so don’t forget to talk to your employer and arrange it.

READ ALSO: EXPLAINED: The rules and deadlines for filing Italian taxes in 2022

The self-declaration serves to establish that the worker has all the requirements to be a beneficiary. That means the person does not go over the income ceiling for the benefit, for example.

You will also have to declare that you will not receive a €200 bonus from other sources, such as from being a recipient of the citizen income or through another employment relationship.

How can other workers apply?

Italy’s government expanded the bonus payment scheme to more people in early May, as The Local reported.

Seasonal workers, domestic and cleaning staff, the self-employed, the unemployed and those on Italy’s ‘citizens’ income’ were added to the categories of people in Italy eligible for a one-off €200 payment.

READ ALSO: Italy expands €200 payment scheme and introduces public transport bonus

These other categories of workers will not receive automatic payment, though. Instead, they need to make a special request to INPS to receive the bonus.

There are different deadlines for different people, so “domestic workers” (lavoratori domestici) need to apply by September 30th. Other workers, such as seasonal, for example, have until October 21st.

You can apply for the bonus on the INPS website. The payments will be made at a later date.

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