IMF says Italy faces “monumental challenge”, cuts growth outlook – Yahoo Finance Spain

By Gavin Jones

ROME (Reuters) – Italy’s economy will grow less than one percent this year and only marginally faster in 2017 he said Tuesday the International Monetary Fund (IMF), cutting its previous forecast as a result of Britain’s decision to leave the European Union.

the result of the referendum last month in the UK has highlighted the volatility financial and increased the downside risks for Italy, markets the Fund said in a report following its annual meeting with the Italian authorities.

the third largest economy in the euro area is projected to grow at a rate of “just under one percent in 2016 and about 1 percent in 2017,” the IMF said. His previous projections, made in May forecast a growth of 1.1 percent this year and 1.25 percent in 2017.

Economists have lowering the prospects for Italy from the British referendum. The business lobby Confindustria now expects growth of only 0.8 percent this year and 0.6 percent in 2017. [nL8N19N1NV]

Italy, one of the slowest growing economies in Europe, will have trouble catching up with their counterparts even if recent reforms are fully implemented, the report said.

Only 2025 Italian GDP will return to its 2008 peak before the global financial crisis, he added . In the same period, some of the members of the euro zone Italy is expected to rise between 20 and 25 percent above pre-crisis levels.

“The authorities therefore face a challenge monumental. the recovery needs to be strengthened to reduce high unemployment faster and you have to build shock absorbers, including repairing bank balance sheets and reducing the high public debt, “he said.

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“the risk is on the downside,” he added, listing a number of issues such as poor asset quality of banks in Italy, the volatility of financial markets and the impact of the slowdown of world merchandise exports.

“If downside risks materialize, regional and global contagion could be significant given the systemic weight of Italy,” he said.

banks Italians, who charged with a delinquency of 360.000 million euros and whose shares have plunged more than 50 percent this year, are a particular threat to the economic outlook, the IMF said.

“unless that quality problems and return it in a timely manner to address the problems of weak banks may eventually weigh on the rest of the system, “said

.