MILAN (Reuters) – The Bank of Italy on Friday lowered its expectation for economic growth this year to 2.6% from a forecast of 3.8% given in January, citing the uncertainty surrounding Russia’s invasion of Ukraine.
The economy is seen expanding by 1.6% in 2023 and 1.8% in 2024, up from previous estimates of 2.5% and 1.7%, respectively, the central bank added in a statement.
However, the bank said its forecasts were drawn up before national statistics institute ISTAT revised up Italy’s first quarter gross domestic product data on May 31 to show a 0.1% increase instead of a previously reported 0.2% decline.
This revision, all else being equal, would add 0.4 percentage points to Italy’s growth this year, the bank said, meaning it would probably be around 3% rather than 2.6%.
The central bank also warned that in a worst-case scenario – in case of a stop to Russian energy imports – the economy would not grow this year, decline by more than a percentage point in 2023 and return to growth in 2024.
The BOI also said it sees inflation at 6.2% this year, up from a 3.5% forecast in January, while estimates for 2023 and 2024 were raised to 2.7% and 2% from 1.6% and 1.7%, respectively.
The central bank’s new projections follow those published on Thursday by the European central bank, that were revised up for inflation and down for growth for the whole bloc.
(Alessia Pé, editing by Agnieszka Flak)
