Italy still sees 0.4 pct fall in 2012 GDP-govt source

MILAN Thu Jan 5, 2012 6:47am EST

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MILAN Jan 5 (Reuters) - Italy's government is sticking to its forecast of a 0.4 percent fall in gross domestic product in 2012, a government source told Reuters on Thursday, banking on a better scenario than that painted by some private forecasters in recent weeks.

"Exports are holding up rather well and manufacturing is stabilising. The good perfomance of the German economy helps and also the latest U.S. data are not bad," the source said.

The source said new government incentives may spur private investments in Italy but that private consumption remained a deeply sore point.

"2012 is going to be a disaster for disposable income. Salaries are frozen, inflation is not going down and taxes are higher."

The government forecast a 0.4 contraction in Italy's 2012 GDP at the beginning of December when it approved a 33 billion euro austerity package.

In mid-December, Italy's main employers' lobby Confindustria slashed its 2012 forecast for the country's economy to a 1.6 percent contraction.. A few days later, also Milan-based think-tank REF forecast a 1.5 percent fall in Italy's 2012 GDP growth.

The Italian economy is expected to have grown by a meagre 0.6 percent in 2011.

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