ROME (Reuters) - The Bank of Italy on Friday cut its forecast for Italian economic growth this year and next, citing higher energy costs and slowing manufacturing output behind the weaker outlook.
In its quarterly economic bulletin the central bank projected growth of 1.3 percent this year, down from a 1.5 percent estimate made in January, and just 1.0 percent next year compared with 1.2 percent previously.
The Bank of Italy is the latest in a series of institutes to cut their forecasts for the euro zone's third-largest economy, posing a challenge for the anti-establishment government which took office last month.
Economy Minister Giovanni Tria said last week the 1.5 percent growth forecast inherited from the previous centre-left administration would probably have to be revised down due to slowing exports and economic output.
The European Commission on Thursday forecast growth of 1.3 percent this year and 1.1 percent in 2019. The same estimates were made last month by Italian employers' lobby Confindustria.
In the second quarter, growth domestic product (GDP) growth probably slowed to 0.2 percent from the previous three months, the Bank of Italy said, weighed down by sluggish industrial output.
That would compare with first quarter growth of 0.3 percent and would be the slowest rate since the third quarter of 2016.
National statistics bureau ISTAT will issue preliminary Q2 GDP data on July 31.
Even the 0.2 percent forecasts for the second quarter carries "downside risks connected with the weakness of manufacturing," the bulletin said.
It forecast that consumer price inflation, based on the EU-harmonised index, would rise 1.3 percent this year, and by 1.5 percent in 2019, remaining significantly below the European Central Bank's objective of close to 2 percent.
Core inflation, excluding fresh food and energy, is seen at just 0.8 percent this year and 1.3 percent in 2019.
(reporting By Gavin Jones)
