Bank of Italy cuts 2016 growth forecast on global economic slowdown

The Central Bank of Italy said Tuesday it has lowered its 2016 growth forecast on grounds of a global economic slowdown, while it maintained that domestic demand would remain on a moderate expansionary path.

The Bank of Italy said in its statement that the economy’s growth in 2016 is likely to be restricted to 1.1 percent, which is slightly lower than the government's 1.2 percent forecast, and which is a significant reduction to the bank's own prior 1.5 percent estimate from January.

The year ahead is expected to witness a growth of 1.2 percent as against a January forecast of 1.4 percent. On the other hand, the central bank has forecasted the Eurozone’s third-largest economy growing by 1.2 percent in 2018.

Meanwhile, Italy retail purchasing managers’ index, released by Markit dropped further to 45.2 in May, from April 14-month low of 42.6, signalling a solid drop in retail sales worldwide. EUR/USD is lower following the news with the pair trading at an intraday low around 1.1335/40.