Bank of Italy cuts 2024 GDP forecast to 0.6%, sees inflation below 2%

ROME (Reuters) – The Italian economy will grow by just 0.6% next year, the country’s central bank said on Friday, cutting a previous forecast of 0.8% made two months ago and citing “signs of more prolonged cyclical weakness”.

Italy’s average EU-harmonised inflation rate should come in next year at 1.9%, the bank said in an economic report, inside the European Central Bank’s target of 2% for the euro zone as a whole.

Italian gross domestic product (GDP) will rise 0.7% this year, the Bank of Italy said, confirming its October estimate.

Looking further ahead, the report marginally raised the outlook for 2025 growth in the euro zone’s third largest economy to 1.1% from 1.0%.

Italy’s government is forecasting growth of 0.8 for 2023, 1.2% next year and 1.4% in 2025.

The bank cut its inflation forecasts for 2023-2025, “reflecting a faster decline in energy prices and a stronger slowdown in the underlying component, shown by the latest data”.

The average HICP rate is forecast at 6.0% this year compared with 6.1% estimated in October.

It will slow to 1.9% in 2024 and 1.8% in 2025, down from previous forecasts of 2.4% and 1.9% respectively, the bulletin said.

(Reporting by Antonella Cinelli, editing by Gavin Jones)