Italian business lobby cuts 2023 economic growth forecast to zero due to energy concerns

MILAN, Oct 8 (Reuters) – Italy’s economy will grow more than expected in 2022 but stagnate in 2023, the country’s main business lobby said on Saturday, warning of a gap in natural gas between the European Union and Russia. Supply-side tensions make the outlook highly uncertain.

In a report, Confindustria slashed its 2023 GDP growth forecast to zero from 1.6% in April, while slashing its 2022 forecast to 3.4% from 1.9% due to the Italian economy’s stellar performance in the first half of the year %.

The 2023 downgrade echoes the government’s forecast and comes after Mario Draghi’s outgoing government last week cut its growth forecast for next year to 0.6%, citing high energy costs. Still, it said GDP would grow 3.3% in 2022, up from a 3.1% forecast in April.

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The lower forecast for next year underscores the economic headwinds facing Georgia Melloni, who led a right-wing coalition to victory in last month’s election and is expected to be named prime minister this month.

“If tensions between the EU and Russia escalate to the point where they lead to further price increases and/or disruptions to gas supplies, the negative impact on production activity will be more severe, implying a more pronounced recession,” Confindustria said in its report Say.

Moscow and several European countries, including Germany, have been at loggerheads over Russian gas supplies since Russia invaded Ukraine in February.

Russian gas now accounts for only around 10% of Italian gas imports, down from around 40%, while the share from Algeria and Northern Europe has increased.

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Reporting by Gianluca Semeraro; Editing by David Holmes

Our Standard: The Thomson Reuters Trust Principles.

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