ROME, Dec 16 - Italy's influential employers' body Confindustria on Tuesday painted a rosier picture for the euro zone's third-largest economy, saying it was destined for better growth but that the government needed to buck up its ideas. Confindustria, which represents all Italy's major companies, raised its 2003 growth forecast to 0.5 percent from the 0.3 percent envisaged in September, though it said everything was "rather fragile." For next year, the Rome-based group predicted economic expansion of 1.6 percent, compared with a previous estimate of 1.4 percent, but had harsh words for Prime Minister Silvio Berlusconi's government. "This soft landing scenario is conditional on economic policy," Confindustria's chief economist Paolo Garonna told reporters at a briefing. "Both businesses and families are in a state of uncertainty which can only be overcome with a big improvement in economic policy and with a major step forward from the government midway through its term," he added. The report noted that while a strong economic recovery in the United States and signs of a pick-up around Europe would have positive knock-on effects for Italy, what would help it most was "government reforms creating a favourable climate for investments."
Italy tipped into recession in the first half of 2003, but between July and September, it posted its best quarterly growth rate in two and a half years. The 0.5 percent third quarter expansion was mainly export-driven, with "Made in Italy" sales overseas leaping almost six percent, while fixed investments fell 0.4 percent. Despite a healthier growth outlook, Confindustria left its Italian budget deficit forecasts unchanged, seeing the shortfall at 2.8 percent of GDP this year and 2.5 percent next year. However, it said Italy was likely to scale back its debt mountain by fractionally more than it had expected earlier in the year. Confindustria predicted a debt-to-GDP ratio of 106 percent this year, compared with its September estimate of 106.2 percent. In 2004, it sees the debt pile falling to 104.8 percent, versus an earlier prediction of 105.1 percent.//