Italy says it has reduced its 2012 economic growth outlook to minus 1.2 percent from minus 0.4 percent, predicting that Rome will also miss its 2013 target for a balanced budget.
"Despite the progress made, there is still a long way to go in a context that is more favorable but still characterized by elements of uncertainty," AFP quoted a report that accompanied the new forecasts as saying on Wednesday.
The Italian government has also admitted that there has been a further deterioration of the economic situation since December.
This comes while Italy’s Premier Mario Monti had initially vowed to uphold the previous government's pledge to balance the budget in 2013.
Monti's government has now raised the 2013 deficit target from 0.1 percent of the Gross Domestic Product (GDP) to 0.5 percent.
Rome says the new figure will still be in line with the European fiscal compact treaty.
The revised economic outlook is a blow for Monti who implemented a series of tough reforms to contain the Italian debt crisis.
Italy, one of the biggest eurozone economies, has fallen into recession after its economy contracted by 0.2 percent in the third quarter and by 0.7 percent in the fourth quarter of 2011.
The worsening debt crisis has forced EU governments to adopt harsh austerity measures and tough economic reforms, triggering incidents of social unrest and massive protests in many European countries.