EC: Italy likely to exit deficit procedure

The European Commission (EC) on Friday forecast Italy's budget deficit would be under the 3 percent limit set by the European Union, which facilitates the closure of a deficit-infraction procedure, though there were no signals of recovery. According to EC estimates, the Italian budget deficit will be 2.9 percent in 2013 and will continue to fall to 2.4 percent next year. Economy Minister Fabrizio Saccomanni is expected to report to the EC in the next weeks enabling Italy to be cleared at a summit scheduled in the end of June. However, Italian GDP, which is experiencing its longest recession in 20 years, was expected to drop by 1.3 percent this year and 0.7 percent in 2014. National debt is projected to exceed the 130-percent threshold to reach 131.4 percent this year and 132.2 percent in 2014, according to the EC estimates. Unemployment, especially among the youth, was also forecast to reach record heights of 11.8 percent this year and 12.2 percent in 2014. According to a recent study, suicides that can be linked to the economic crisis and unemployment in Italy have increased by 20 to 30 percent in the last four years. Earlier this week, newly-appointed Prime Minister Enrico Letta travelled to Berlin, Paris and Brussels to reassure European partners that his government would pursue economic recovery in the framework of budget consolidation. His unprecedented left-right coalition, featuring politicians and institutional figures backing from across the political spectrum, will face the tough challenge of how to reduce debt without raising taxes and how to fund the ambitious reforms it has outlined. Letta promised that with his government the period of painful austerity was over and he would introduce new policies focused on growth. He said that his government was racing against time but warned that he would resign if he does not see sufficient achievements in the next 18 months.