Italy grows slightly less than forecast in 2015, debt edges up to new peak

(Reuters) - Italy’s economy grew slightly less than forecast in 2015 after a three-year recession, while the public debt climbed to a new record, data showed on Tuesday.

New buildings under construction are seen in Milan in this file photo taken on April 18, 2012. REUTERS/ Stefano Rellandini

Gross domestic product rose 0.8 percent following a contraction of 0.3 percent in 2014, which was revised from a previously reported fall of 0.4 percent, national statistics bureau ISTAT reported.

Prime Minister Matteo Renzi’s government had forecast growth of 0.9 percent last year, when there were three more working days compared with the year before.

ISTAT said this had increased growth by around 0.1 percentage points.

The government is officially forecasting growth of 1.6 percent this year, but recent data has been disappointing and Renzi has already indicated the target is probably out of reach.

The Organisation for Economic Cooperation and Development forecast last month that Italy would post 2016 growth of no more than 1 percent.

Italy’s budget deficit came in at 2.6 percent of GDP last year, ISTAT said, inside the European Union’s 3 percent ceiling and exactly in line with the government’s target.

That compared with a 3.0 percent deficit in 2014, which was unrevised.

Rome’s public debt - the highest in the euro zone after Greece’s as a proportion of GDP - reached a new peak last year of 132.6 percent of GDP.

That was up marginally from 132.5 percent in 2014, but below the government’s latest forecast of 132.8.

The 2014 level was revised up from a previously reported 132.3 percent.

Chronically slow growth and stagnant prices are making it harder for Italy to cut its debt, and Renzi is pushing for the EU to relax its so-called “fiscal compact”, which mandates severe fiscal consolidation for high-debt countries like Italy.

Reporting by Gavin Jones