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Tuesday, 15 May, 2001, 12:07 GMT 13:07 UK
Italian economy grows solidly
Italy's prime minister-elect Silvio Berlusconi
All eyes are now on Mr Berlusconi and how he will handle the economy
The Italian economy grew more than expected in the first quarter of this year, official data has shown.

Gross domestic product (GDP) increased 0.7% in the period from the fourth quarter of 2000 and was up 2.3% year-on-year, national statistics institute ISTAT said.

Most economists had forecast growth of 0.6% quarter-on-quarter and 2.2% year-on-year.

The data was viewed as evidence that the Italian economy is holding up fairly well in the face of a global economic slowdown that has been particularly marked in the United States.

Second-half caution

"The data confirm that in the first three months of the year growth continued at a good rate... sustained mainly by consumption, exports and inventories," said Gianluigi Mandruzzato of Banca Intesa-BCI in Milan.

However, he and other economists said the data gave no reason for revising a cautious view of Italian economic prospects for the second half of the year.

They believe the effect of global economic slowdown on Italy has been growing.

Stephane Deo of UBS Warburg in Paris said: "Despite this good number, we would like to remain cautious as we believe the main problem for the Italian economy - and actually for the eurozone - will come during the second half.

On the plus side, he said the programme of prime minister-elect Silvio Berlusconi, which includes heavy tax cuts and an increase in public sector investment, could boost domestic demand.

But he added: "We will have to monitor closely which proposals are really implemented."

Too optimistic

Italy's centre-left government - defeated in Sunday's general election by Mr Berlusconi's centre-right grouping - had originally forecast the economy would grow 2.9% in 2001.

It later trimmed its growth forecast to 2.5%, which some economists, including those at the International Monetary Fund and the OECD, still view as too optimistic.

They are predicting growth of about 2%.

See also:

15 May 01 | Europe
25 Apr 01 | Business
04 May 01 | Business
02 May 01 | Business
27 Apr 01 | Business
15 May 01 | Country profiles
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