Italy sees weaker 2024 GDP, with industrial sector in trouble, economy minister says

ROME (Reuters) - Italy will likely end this year with an annual economic growth rate of 0.7%, Economy Minister Giancarlo Giorgetti said on Thursday, warning that the industrial sector risked slumping.

Speaking at a political event promoted by Prime Minister Giorgia Meloni's Brothers of Italy party, Giorgetti said the estimate was adjusted for the number of days worked.

The government in September set an unadjusted 1% growth target for this year.

Giorgetti said the disappointing performance of Germany's economy was weighing on Italy, adding that the industry sector was the main cause of concern for the government.

"We see signs of a nosedive," he said.

However, the GDP downward revision "doesn't change our public finance targets," the minister added.

Italy hopes to bring its deficit below the European Union's 3% of gross domestic product (GDP) ceiling in 2026 from 3.8 targeted this year.

Part of the lower-than-expected growth is also related to delays in spending European Union's post-COVID recovery funds, which has impacted the economy.

Italy is due to receive 194.4 billion euros ($203.81 billion) in cheap loans and grants from the bloc's Recovery and Resilience Facility (RRF) by 2026, more than any other state in absolute terms.

Speaking at the same event on Thursday, EU Affairs Minister Tommaso Foti said Italy wanted to replace some planned projects that Rome will be unable to complete by the 2026 deadline, with others that could be wrapped up within the allowed timeframe.

"We are going towards a rescheduling next February," Foti said.

To support the economy, the government wants to cut the IRES corporate tax for those companies that make investments and new hirings under certain conditions.

The measure has an estimated cost of around 400 million euros, which Giorgetti said Rome planned to cover by seeking an additional contributions from banks.

Italy expects to raise more than 5 billion euros from the financial sector over the next three years through a package of measures already included in the government's 2025 budget.

($1 = 0.9538 euros)

(Reporting by Giuseppe Fonte; Editing by Crispian Balmer)