* Sees GDP up 0.2 pct this year, government sees 0.8 pct
* Deficit to be 2.9 pct GDP vs 2.6 pct government target
* Renzi seeking budget leeway at EU summit to help growth
(Adds background and details)
By Francesca Piscioneri
ROME, June 26 Italy's employers' association
Confindustria on Thursday slashed its growth forecast for this
year and urged Prime Minister Matteo Renzi to act quickly to
turn around the euro zone's third-biggest economy.
Confindustria said the economy would expand 0.2 percent, a
half percentage point lower than its 0.7 percent December
forecast and far below the government's 0.8 percent target.
"The health of Italy's economy remains fragile," Luca
Paolazzi, the group's chief economist, told reporters. "The
slow-growth sickness has not been cured and the patient is still
While Renzi's government, which took over in February, has
given an "energetic impulse" to economic reforms, it must act
quickly to boost investments, reduce taxes, overhaul wage
dynamics, and free up credit for businesses, he said.
At a summit of European leaders today and tomorrow, Renzi is
pushing for an interpretation of European Union budget rules
that would give more leeway to countries making reforms. He has
tied his support for former Luxembourg Prime Minister
Jean-Claude Juncker to become the new European Commission chief
to an agreement over the issue.
Renzi has the daunting task of trying to turn around Italy's
economy, which has not grown for more than a decade. Youth
unemployment has reached more than 40 percent and the country's
debt hovers above 2 trillion euros ($2.7 trillion).
On Tuesday, Renzi, buoyed by a landslide victory in the
European Parliament vote last month, said Europe's "high
priests" of austerity risked condemning the region to permanent
Italy takes over the EU's rotating, six-month presidency
Though growth will be minimal this year, Confindustria said
the economy grew 0.3 percent in the second quarter after
shrinking 0.1 percent in the first. Growth is seen at 1 percent
next year, it said.
The government forecasts gross domestic product will rise
0.8 percent in 2014 and 1.3 percent in 2015.
The budget deficit will remain just below the European Union
ceiling of 3 percent of output, coming in at 2.9 percent, higher
than the government's 2.6 percent goal, Confindustria said, and
fall to 2.5 percent of GDP next year.
Debt in 2014 will come in at 135.9 percent of GDP compared
with a government target of 134.9 percent, it said, and will
fall to 135.1 percent in 2015. The government's goal is to
shrink debt to 133.3 percent of GDP next year.
($1 = 0.7335 Euros)
(Writing by Steve Scherer; Editing by Ruth Pitchford)