Italy has cut its forecasts for the economy.
The cabinet now sees GDP shrinking 1.7 percent this year.
Back in April it projected contraction of 1.3 percent.
Next year it is forecasting growth of 1.0 percent down from 1.3 percent previously.
That is still more optimistic than the expectations of most analysts. The average forecast in a survey of analysts by Reuters in July pointed to 2014 growth of just 0.5 percent, while the International Monetary Fund in August predicted 0.7 percent.
Prime Minister Enrico Letta said the growth forecasts are “reasonable and achievable so long as there is political stability”.
He complained, however, that in-fighting in the government coalition is threatening its ability to make the reforms needed to spur growth and consolidate Italy’s strained public finances.
Economy Minister Fabrizio Saccomanni said he expected that growth would be bolstered by the government’s drive to pay money long owed to private suppliers. He shrugged off recent weak data on industrial output and orders for July.
Saccomanni also forecast that gross domestic product would be flat in the third quarter and growth would return in the last three months of the year before consolidating in 2014.
Eight consecutive quarters of contraction through to the middle of this year have left the eurozone’s third-largest economy in its longest post-war recession and recent data has cast doubt on hopes of a recovery soon.
After years of stagnation and contraction the economy is smaller now, in inflation-adjusted terms, than it was in 2001.