Italy's economy is set to slow faster-than-expected this year, but may the pace of growth may improve slightly in 2019, supported by the expansionary fiscal policies, the statistical office ISTAT said Wednesday.
The agency cut this year's growth forecast to 1.1 percent from 1.4 percent projected in May. In 2017, the Italian economy grew 1.6 percent.
Growth is forecast to rise to 1.3 percent next year, the ISTAT said in its biannual report on the macroeconomic outlook.
These projections take into account the less favorable international trade, uncertainty, policy decisions of the European Central Bank and the expansionary fiscal policies implemented in the 2018 Budget Law, the ISTAT said.
The Italian economy stagnated in the third quarter, mainly due to a slowdown in the industrial sector, preliminary estimates from ISTAT showed in October.
Domestic demand is expected recover next year, as it would benefit from the positive effects of the tax policies in the latest budget plan that are meant to reduce poverty and boost public investment.
Foreign trade is expected to provide zero contribution to growth next year.
The unemployment rate is forecast to ease, but remain significantly higher than that of the euro area.
Meanwhile, inflation is expected to accelerate at rates slower than that of the Eurozone.
Elsewhere on Wednesday, the OECD cut Italy's growth forecast for this year to 1 percent and that for next year to 0.9 percent. The economy is expected to expand 0.9 percent in 2020.
"Economic and social reforms and a prudent fiscal policy must continue if Italy is to enhance social cohesion and boost growth," the think tank said.
"Without sustainable fiscal policy, the room for the public sector to provide benefits and help the poor will inevitably narrow."
Gradually raising the primary budget surplus and boosting growth is key for a durable reduction of the public debt-to-GDP ratio, the report added.
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