IMF likely to confirm Italy GDP to grow around 0.6 percent this year: source

ROME Mon Mar 24, 2014 2:54pm EDT

Italy's Finance Minister Pier Carlo Padoan reacts during a news conference at Chigi palace in Rome March 12, 2014. REUTERS/Remo Casilli

Italy's Finance Minister Pier Carlo Padoan reacts during a news conference at Chigi palace in Rome March 12, 2014.

Credit: Reuters/Remo Casilli

ROME (Reuters) - The International Monetary Fund is likely to confirm that Italy's economy will grow around 0.6 percent this year and 1.1 percent in 2015 when it issues new forecasts next month, a source close to the matter said on Monday.

"There's unlikely to be much change," said the source, who asked not be named, when asked if the forecasts will be revised in the IMF's World Economic Outlook, to be issued in the first week of April. The current forecasts were released in January.

The Italian government's most recent forecasts envisage growth of 1.1 percent this year and 1.7 percent in 2015, but Economy Minister Pier Carlo Padoan has indicated that this year's forecast will be cut sharply next month.

An Italian government source told Reuters on Monday the new official projection, to be contained in the Economic and Financial Document (DEF) to be published in early April, will probably be between 0.6 percent and 0.8 percent.

For the moment, Italy has not decided whether to raise its deficit above 2.6 percent of gross domestic product (GDP), where the government says it is headed based on current trends, the source said.

The official government deficit target is 2.5 percent, though at a European Union summit in Brussels last week Prime Minister Matteo Renzi had indicated he could seek more room.

However, the government was considering raising the planned amount it seeks to raise through privatizations above a current goal of 0.5 percent of GDP a year, which the source described as "very conservative".

The plan is part of a plan to curb a debt pile of over 2 trillion euro and introduce sweeping reforms to boost the euro zone's third largest economy, among the bloc's most sluggish for over a decade.

(Reporting by Giselda Vagnoni and Giuseppe Fonte, writing by Gavin Jones; Editing by Susan Fenton and Toby Chopra)

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