Italian growth outlook brightens but slowdown ahead, business lobby says

ROME, Oct 14 (Reuters) - Italy's economy will grow by 1% this year, the country's main business lobby Confindustria forecast on Wednesday, hiking a previous 0.5% estimate made in March but warning that a renewed slowdown is expected in 2027.

The improved outlook this year is thanks in large measure to European Union post-COVID-19 funds (PNRR) which have boosted investments and ensured firmer-than-expected growth in the first two quarters, Confindustria said in its twice-yearly report.

• It said turmoil in the Middle East had driven up global oil prices by less than expected

• In Italy, the pass-through from energy costs to prices of other goods and services has been weaker than feared

• However, quarterly growth in the second half of the year will be weak

• Growth will slow to 0.6% in 2027 due to the end of the PNRR, the recent rise in oil prices, and higher inflation and interest rates

• Confindustria's 2026 growth forecast of 1% is in line with that of Giorgia Meloni's government. For 2027 the government forecasts 0.8%

• Growth last year came in at 0.6%

• Confindustria forecast the 2026 budget deficit-to-gross domestic product ratio at 2.9%, in line with the government

• It sharply hiked its forecast for Italy's 2026 average inflation rate to 3.2% from 2.5%

• It forecast inflation would ease to 2.2% in 2027

(Reporting By Gavin Jones)