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Italy must cut growth forecast – Economy Minister

Italy must cut its output growth forecast, its Economy Minister told a newspaper, adding that economic weakness was a European problem that the region’s governments needed to tackle together.

The government in Rome predicted in April that Italy, which unexpectedly fell back into recession in the second quarter of this year, would see 0.8 per cent growth in 2014.

“We must revise the GDP [gross domestic product] growth forecast to the downside,” Pier Carlo Padoan said in an interview published in daily Corriere della Sera yesterday.

A cut could bring the government into line with most economists, who expect little or no growth for the eurozone’s third-largest economy this year.

Prime Minister Matteo Renzi is due to unveil a package of measures tomorrow, aimed at breathing life back into an economy which has been one of the world’s most sluggish for the past two decades.

The current situation is worse than expected and no one is happy with it, but it calls attention to the fact that we need joint action

Padoan said Italy would keep its budget deficit below the European Union limit of three per cent of gross domestic product this year, repeating a promise he and Renzi have made several times.

He told Corriere that slow growth was a problem across Europe and called for a united “European vision” for reforms which would allow all the region’s governments to work together.

“The current situation is worse than expected and no one is happy with it, but it calls attention to the fact that we need joint action,” Padoan said.

Italy’s GDP fell by 1.9 per cent last year and by 2.4 per cent in 2012. It is now lower, in inflation-adjusted terms, than at any time since 2000.

Renzi has faced criticism for focusing less on immediate economic measures than on long-term institutional reforms like changing the electoral law and abolishing the upper parliamentary house as an elected chamber.

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