Italy econ minister sees global slowdown: report

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"I see a period in which the sum of all debt leads to a likely slowdown in the growth of the world economy," he said in an interview published on Monday.

MILAN (Reuters) - The global economy is likely to slow due to the impact of a big correction in the U.S. balance of payments deficit but should avoid recession, Italian Economy Minister Tommaso Padoa-Schioppa told the Financial Times.

"I see a period in which the sum of all debt leads to a likely slowdown in the growth of the world economy," he said in an interview published on Monday.

"For demographic and other reasons, I do not think Europe can grow fast enough to compensate completely for the slowing down in the U.S.," he said, and neither could Asia's emerging economies.

Padoa-Schioppa said there could be an increase in protectionism if there were a slowdown, adding that Europe could move to a trade deficit with the rest of the world.

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The world economy should continue to grow, he said, but by "a few percentage points less than we have seen recently."

Lack of currency flexibility in Asia "makes it even more risky that Europe may suffer from the adjustment."

Turning to the issue of changing voting power of emerging economies in the International Monetary Fund, Padoa-Schioppa said he thought Europe would accept a reduction in its share.

"I think it will be accepted. Europe as a group must accept a reduction in its share if we want to be consistent with the idea that percentages must add up to 100 and not 110."

The overhaul of the IMF's voting system has been forced by the fast rise of emerging powers such as China and India, especially now as growth in the United States and Europe, which dominate the fund, is lagging.

In Italy, Padoa-Schioppa said, public spending needed to be improved in a range of sectors from transportation to education, and warned that could mean job losses.

"We cannot get finance from outside. We have to get it from within the budget by saving on the way we spend," he told the Financial Times.

"It is extremely difficult to bring about a reduction in spending, particularly in a highly unionized country such as Italy," Padoa-Schioppa said. "All these are services. All that means a reduction in employment."

(Reporting by Jo Winterbottom, editing by Mike Peacock)