Italy's PM confident of growth

ROME - Italian Prime Minister Mario Monti on Monday said he thought after two consecutive years of decline, Italy's GDP would grow next year.

Differing from most who predict an uncertain future for Italy, Monti -- who took over as the head of a technocrat government in Rome 10 months ago -- told an Organization for Economic Cooperation and Development (OECD) meeting that Italy was on a path to positive economic growth in 2013.

If the prime minister is correct and the Italian economy does return to positive growth in 2013, it would contrast forecasts from industrial associations such as Confindustria, Italy's National Statistics Institute (which downgraded its growth estimates for next year only last week and predicted a contraction of 0.2 percent compared to 2012), and even those from the OECD, whose Secretary-General Jose Angel Gurria was seated near Monti as he made his comments.

The OECD's latest forecast, released in May, said Italy's economy may shrink 0.4 percent next year.

Monti, an economist, cited the recent 0.2 percent negative growth estimate from ISTAT, the Italian statistics institute, in his remarks. He said the period of growth would start in the second half part of the year, something the OECD predicted in its models as well when it said that economic "activity seems likely to decline over the next year but will turn up in late 2013."

The question, according to economists, is whether strong economic growth in the second half of next year will be enough to result in positive growth for the year as a whole.

"A lot will depend on how weak the economy is in the first part of the year and how weak growth is over the remainder of 2012," said Matteo Alteri, a former Treasury economist now with LUISS University in Rome.

"If the goal is to show positive growth in 2013, it would be better if the growth was a little stronger early next year so as not to create too big a hole to climb out of," he added.

Alteri said it was not clear whether Monti simply meant that the country would return to positive growth only late next year or for next year as a whole. But either way, he said, Monti remained one of the most bullish figures when it comes to Italy's economic prospects.

"The government itself had been predicting positive 0.5 percent growth for 2013 until its latest revision," Alteri said.

"The prime minister obviously has faith that the reforms he's pushed through will start to pay dividends, both in sparking growth, paying down debt, and the amount Italy needs to pay in order to service its debt."

"In the end, aside from the issue of perception, it may not be important if the economy finishes the year with positive growth or if growth starts in the second half and continues into 2014," he stated.

Government officials at the OECD meeting declined to elaborate on Monti's remarks except to say they were consistent with his previous statements.