Italian election campaign won't change economic outlook

NEW YORK: Italy's election campaign will not change the country's economic outlook, but any future government will need to deepen the present government's reform agenda, Italy's economy and finance minister, Vittorio Grilli, said on Thursday.

Grilli's comments in New York were aimed at reassuring markets that were ruffled this week when the Prime Minister Mario Monti said he would resign after his technocrat government passes its 2013 budget, expected before Christmas.

His decision, which followed an announcement by his discredited predecessor Silvio Berlusconi that he planned to run for office again, upset financial markets and pushed up Italy's borrowing costs.

General elections are now expected in February, a few weeks earlier than was originally planned.

"I understand elections are times of uncertainties, but I don't see any substantial fact that can arise from the electoral campaign that would change the fundamentals of the Italian economy," Grilli said at the Council on Foreign Relations.

Italy, the euro zone's third-biggest economy, has embarked on a tough austerity path that has helped it regain investor confidence and keep borrowing costs in check.

But the wobble in markets this week, although a far cry from the crisis of confidence that helped bring about Berlusconi's ouster late last year, is a reminder that Italy cannot take investor confidence for granted.

Austerity measures introduced by Monti's interim government to cut debt and rein in the deficit have included tax increases, spending cuts and pension reform, and have taken their toll on consumers and businesses.

Grilli has said the Italian economy should begin to recover from a painful recession in the second half of 2013. Italy fell into recession in the middle of last year.

The EU expects the Italian economy to shrink 2.3 percent this year and 0.5 percent in 2013 before it returns to meagre growth of 0.8 percent in 2014. - Reuters

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