Italy's government is falling short on needed reforms while annual economic growth is projected to stay below 1% through 2023, the IMF said.
The Washington-based fund issued a report on the 2018 review of Italy less than a week after the national statistics office said the country fell into recession at the end of last year.
"The authorities' strategy falls short of comprehensive reforms needed to address the longstanding structural impediments to sustained growth and, therefore, risks leaving the economy vulnerable," the International Monetary Fund said Wednesday at the end of its consultations.
The populist government that took office on June 1 is implementing an expansive spending program that includes income support for the poor and a lower retirement age.
The ruling coalition expects 1% growth this year, while the country's central bank and the IMF in separate reports have estimated 0.6% for 2019. The European Commission may slash its own forecast to 0.2% Thursday, news agency Ansa reported from Brussels.
Lower growth will make it more difficult to reach the budget deficit target agreed to with the Commission for this year.
Growth is projected to stay below 1% annually for five years, ending 2023 at 0.6%, the IMF said.