Italy's plans for an expansionary budget that widens the deficit could end up doing more damage than good for the economy, IMF European Director Poul Thomsen said today. Italy doesn't have the space for fiscal stimulus and should avoid leaning on an artificial boost and instead focus on long-lasting measures, he said. There's even a risk of a negative effect on growth, where budget concerns push yields higher, he said. The unfavorable market response means "the cost to Italian borrowers would go up, and you actually end up slowing the economy." "It needs growth, but it's not a growth that can come through fiscal stimulus," Thomsen said. "There's no fiscal space for that. It has to come through structural reforms, labor market reforms, reforms that increase productivity." For the euro area, the IMF said the headwinds are growing, with "slowing global demand, escalating trade disputes, and higher fuel prices." It sees growth slowing to 1.9% next year and 1.7% in 2020.