(Bloomberg) -- Italian Finance Minister Giovanni Tria warned about the negative effects of a global trade slowdown, and said the country's output gap with other euro-area nations is unacceptable.
“The outlook is not positive,” Tria said of global growth during a parliamentary hearing in Rome. “The most updated forecasts for 2019 show a deceleration for advanced economies, especially for the major European countries.”
Tria said Italy's output gap with the rest of the euro area is “unacceptable 10 years from the start of the crisis,” while addressing growing tensions with the EU over the budget plans.
“A constructive dialogue with the EU Commission will start, and will look at the reasonable contents of what is contained in the budget,” Tria told lawmakers in Rome.
The yield on the Italian 10-year bond steadily rose to 3.63 percent during the hearing, while the spread with similarly dated German bonds widened to 306 basis points.
So far, coalition leaders Luigi Di Maio of the anti-establishment Five Star Movement and Matteo Salvini of the anti-migrant League are sticking by their promises to voters despite market turbulence. They've set the deficit at 2.4 percent of GDP next year, to allow them to start paying for a “citizen's income” for the poor, tax cuts and a lower retirement age.
To contact the reporter on this story: Lorenzo Totaro in Rome at ltotaro@bloomberg.net
To contact the editors responsible for this story: Fergal O'Brien at fobrien@bloomberg.net, Kevin Costelloe, Jerrold Colten
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