By Eric J. Lyman
ROME, July 19 (Xinhua) -- The International Monetary Fund (IMF) this week slashed its estimates for economic growth in Italy -- the first downward adjustment for the country's growth prospects in nearly a year -- but analysts told Xinhua the government was unlikely to counter the development with new pro-growth policies.
Estimates for economic growth are being reduced across Europe, as economists begin to include the impacts of a dramatic increase in tariffs on steel, aluminum, and other products from the United States.
In additional to lowering its estimates for growth in Italy, the IMF said it believed economic growth in Germany and France -- the two euro-zone economies bigger than Italy -- would also suffer under the new U.S. tariff regime.
But the IMF predicted the situation would be particularly difficult in Italy, where "political uncertainty" and dampening domestic demand for products are both seen as strong factors.
Italy was already expected to see less economic growth this year and next than the European Union as a whole, making any slowdown more painful.
"The IMF projections themselves are not the problem. The situation is the trend that the projections reflect," Alessandro Polli, an economist and statistician with Rome's La Sapienza University, said in an interview.
Polli said that as a country that relies heavily on exports, Italy's economy is further hurt by a slowdown in the economies from European trading partners.
Giulio Sapelli, an economist and expert on economic history with the state university of Milan, told Xinhua that changing circumstances are likely to end the country's budding economic recovery that began last year.
The IMF predicted the slowdown would be relatively modest, saying the Italian economy would grow 1.2 percent this year, compared to a previous prediction of 1.5 percent. For 2019, it says the economy would grow 1.0 percent, compared to the earlier prediction of 1.1 percent.
That is more severe than the prediction for the European Union as a whole, where the IMF sees growth slowing to 2.2 percent, compared to 2.4 percent earlier, For next year, it predicts 1.9-percent growth, down by 0.1 percentage points.
It predicted the world economy would grow 3.9 percent this year, unchanged from previous forecasts.
So far, most other multilateral organizations and ratings agencies have left their predictions for this year and next unchanged, though Sapelli said that could change in the coming weeks.
"I think it's expected that the IMF would be the first to show new projections because it makes political considerations and its models are always very volatile," Sapelli said.
Sapelli and Polli both agreed the latest developments are unlikely to change policies for Italy's 50-day-old government, which has so far been focused on issues related to migration and the role of the country within the European Union.
"The government can't rush to change policy because one institution's models show the economy may grow 0.3 percentage points less," Polli said. "I think the government wants strong growth, but I think the policies will change slowly."
Pollsters have said that if slower economic growth is sustained for a long period it could help erode political support for the new government.
So far, support has remained mostly steady since the June 1 installation of the new government under Prime Minister Giuseppe Conte.
