Italian government to discuss document that sees economy slowing down faster than predicted

MILAN – Italian Prime Minister Mario Monti’s government is meeting to discuss a draft document that shows Italy’s economy is slowing down more than previously forecast.

The document projects Italy’s economy will shrink this year by 1.2 per cent, up from previous projections of a 0.4 per cent contraction.

The Economic and Financial Document also says that public debt will rise from nearly 120 per cent of GDP in 2011 to 123.4 per cent this year. The Cabinet is expected to approve the document on Wednesday.

The document also says that the state budget won’t be balanced until at least 2015 — two years later than was pledged by former Premier Silvio Berlusconi last summer.

The International Monetary Fund’s prognosis is even gloomier — it predicts the Italian budget won’t be balanced until at least 2018.