ISTAT cuts Italy GDP forecast to -1.4 pct, unemployment to rise

ROME Mon May 6, 2013 4:16am EDT

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ROME May 6 (Reuters) - Italy's economy will contract by 1.4 percent this year and post a timid recovery in 2014, national statistics institute ISTAT forecast on Monday.

ISTAT's latest forecast for 2013 marked a sharp downward revision from a previous projection of -0.5 percent made in November, reflecting the continued weakness of domestic demand as Italy languishes in its longest recession for 20 years.

In 2014 the euro zone's third-largest economy will grow 0.7 percent, ISTAT said, but unemployment will continue to rise to 12.3 percent from a projected 11.9 percent this year.

ISTAT's GDP forecasts are less upbeat than those of the government, which sees a contraction of 1.3 percent this year and growth of 1.3 percent in 2014.

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