Italy's populist government on Tuesday slashed its 2019 economic growth forecast to 0.2 per cent from a prior estimate of 1.0 per cent, highlighting a gloomy overall eurozone outlook.
The ruling coalition of the anti-establishment Five Star Movement (M5S) and anti-immigrant League party has nonetheless pledged to respect "targets set by the European Commission," a statement issued by the Italian presidency said.
"The government's programmes are confirmed; no new taxes and no change in the finance law," it added.
No press conference was scheduled Tuesday by the government and more details were not available.
The Italian economy, the eurozone's third largest, has been identified as a weak link along with that of normally strong Germany, so while the new number did not come as a complete surprise, it underscored that the 19-nation bloc was likely to struggle to make headway this year.
The International Monetary Fund sharply lowered its growth outlook for the eurozone on Tuesday, saying that gross domestic product (GDP) in the bloc should increase by just 1.3 per cent this year, after a rise of 1.8 per cent in 2018.
Meanwhile, the finance ministry in Rome also raised the budget deficit forecast to 2.4 per cent of GDP from a level of 2.04 per cent agreed upon with EU officials, which could trigger another round of wrangling, and possibly provoke pressure from financial markets.
In late March, Economy Minister Giovanni Tria warned that Italy was headed for zero economic growth this year, even while brushing off possible changes to the government's big-spending budget.
And the European Commission had already pencilled in growth of just 0.2 per cent for Italy, while the IMF's estimate on Tuesday was 0.1 per cent.
The EU had also warned of a new row brewing with Italy over its budget, barely a few months after both sides agreed on a hard-fought deal with Rome's disputed 2019 finances.
Italy's public debt now sits at €2.3 trillion, or 131 per cent of Italy's GDP - way above the 60 per cent EU ceiling, though much of it is held domestically which reduces pressure on the government somewhat.
In the fourth quarter of 2018, the Italian economy contracted owing to a slowdown in exports, plunging it into a technical recession and increasing the government's budgetary woes.
Populist policies by Italy's government have affected business investment meanwhile, while consumer confidence has slumped as well.