Gavin Jones and Giuseppe Fonte

ROME, (Reuters) – Italy has reduced its economic growth estimates from the European Union funds and reforms associated with its Recovery Plan. On Friday, a Treasury document indicated that Italy said the cash would be spent slower.

Italy has the potential to receive grants of up to 200 billion euros (or $2216.82 billion) from the EU Fund. It is the most important beneficiary of the EU’s Fund’s 750 billion Euro kitty, which was established in order help 27 EU member states recover economically from the COVID-19 Pandemic.

According to the Treasury’s Annual Economic and Financial Document (DEF), the Treasury now anticipates that the money will be available less rapidly than what it had in mind when it sent to Brussels its Recovery Plan for investments and reforms last April.

In 2022, the positive growth effect is reduced by 0.3%, 0.4%, 0.4%, 0.04, 0.04, 0.04, 0.03, and 0.0.4 in 2024. The negative impact on 2026 is reduced to 0.4 in 20, 2025, 0,3 in 2025, 0,3 in 2025, and 0.4 respectively.

According to the most recent forecasts, the gross domestic product (GDP), will rise 3.2% in 2026 compared with the Recovery Fund. This is compared to the previous estimate for a 3.6% rise.

Without providing further details, the Treasury stated that the downward revision was due to “different and slower dynamics of the overall spending programme than originally assumed”.

A complementary Italian growth-boosting funds worth 30.6 billion Euros will also be available from the DEF. However, only a third of them (9.5 billion) are expected to be expended before 2026.

These revisions are necessary because the Ukraine war has a negative effect on the economy throughout the Euro zone.

According to the DEF, Italy’s projected GDP growth for 2012 has been lowered from 4.7% in September by 3.1%.

This projection is still more optimistic than the forecasts of independent forecasters. Confindustria is the employer lobby and has forecast a 1.9% growth in 2022.

Italy could suffer further from Russia’s sanctions if its top two banks and its largest energy supplier are more exposed than it should to Russia.

The worst case scenario would be an oil embargo and severe shortages. In this situation, growth is only 0.6% and 0.4% respectively in 2022-2023.

($1 = 0.9224 euros)