The Italian government on Tuesday lowered its growth forecast for this year and next, reflecting an uncertain economic outlook but broadly maintained its projections for cutting the bloated budget deficit.

In its Economic and Financial Document (DEF), the Treasury forecast gross domestic product (GDP) in the eurozone's third largest economy to grow by 1% this year, down from a 1.2% projection made in September.

The latest projection remains significantly above the consensus of most independent bodies, which project Italian growth of around 0.7%.

Rome set a GDP growth estimate of 1.2% next year, down from the previous 1.4% goal set in September.

On the public finance front, the government confirmed its 2024 budget deficit projection at 4.3% of national output.

If achieved, that will mark a sharp reduction from the 7.2% ratio registered in 2023, when Rome far overshot its official target due to the impact of costly fiscal incentives for home renovations.

For 2025, Italy marginally increased its estimate to 3.7% from a previous 3.6% goal.

Economy Minister Giancarlo Giorgetti told reporters after the cabinet approved the new figures that the government was ready to approve corrective measures if necessary to meet the deficit targets set for next year and 2026 exactly.

Italy estimates a deficit-to-GDP ratio of 3% in 2026, which is in line with the European Union ceiling but slightly above the 2.9% target set last year.