Italy downgrades 2022 growth forecast to 3.1%

By Alvise Armellini

ROME (AA) - Italy's government expects much lower growth this year as the economic fallout of the war in Ukraine adds to other economic headwinds like rising inflation and supply bottlenecks.

In a document set to be approved by the cabinet on Wednesday and seen in advance by Anadolu Agency, Rome authorities say the gross domestic product (GDP) is set to rise by 3.1% in 2022, compared to a previous forecast, from late September, of 4.7%.

In February, the European Commission predicted that Italy's GDP would expand by 4.1% this year, while Confindustria, the country's main business lobby, was much more pessimistic in a report issued on the weekend, which forecast annual growth of 1.9%.

According to the government, Italy's GDP will move into negative territory in the first quarter of 2022, shrinking by 0.5% on a quarterly basis, compared to 0.6% growth in the previous three months.

Mario Draghi's executive is also set to dramatically revise inflation forecasts. In the new official forecasts, prices are expected to rise annually by 5.8% in 2022, compared to 1.6% from the previous government forecast.