In April, the government of the anti-establishment 5-Star Movement and the centre-left PD party forecast a fall in gross domestic product of 8% this year and a 2021 rebound of 4.7%.
The new forecasts, along with public finance projections, will be published next week, providing the framework for the 2021 budget which must be presented to the European Commission in mid-October.
The euro zone’s third-largest economy has not seen annual growth of 5% for more than 40 years.
The new forecasts, which still need to be finalised, are based on an unchanged policy scenario. This means they do not incorporate planned expansionary measures to be financed by the European Union’s Recovery Fund, the sources said.
The government estimates it will get some 209 billion euros ($247 billion) in cheap loans and grants by 2023 from the fund, designed to help the EU nations hardest hit by COVID-19.
Rome aims to present its so-called National Recovery and Resilience Plan, which will front-load the spending of up to 10% of this total, to the European Commission early next year, Economy Minister Roberto Gualtieri said last week.
Among a raft of projects under discussion, the government wants to create a national ultra-fast broadband network, upgrade its rail lines and spend more than 30 billion euros in six years to strengthen its healthcare system.
In a paper published this week, the government said Europe-funded reforms could help Italy double its growth rate, narrow its north-south divide and even increase its birth rate - one of the lowest in the world. Editing by Jan Harvey