EU says Italy 2013 recession to be worse than expected

ROME Fri Feb 22, 2013 5:06am EST

ROME Feb 22 (Reuters) - The European Commission forecast on Friday Italy's recession would be worse this year than previous estimates showed, underlining the scale of the challenge facing the government to be elected this weekend.

Italy's economy will shrink 1 percent in 2013, the EU's winter forecast said, double its November estimate of a 0.5 percent fall. This compares to a forecast of -0.3 percent for the euro zone, showing Italy continues to lag its partners.

Austerity-weary Italians vote this weekend for the successors of a technocrat government led by economist Mario Monti, which introduced taxes and spending cuts to pull Italy from the brink of a Greek-style financial meltdown.

The commission's forecast is in line with Bank of Italy estimate that also sees a fall of 1 percent of GDP this year, but is more pessimistic that the government's forecast for a 0.2 percent decline in GDP this year.

The commission also hiked its unemployment forecasts for the country, predicting the unemployment rate would rise to 11.6 percent this year and 12 percent in 2014.

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