Italian economy may contract this year - economy minister

ROME (Reuters) - Italy's economy may contract in 2014 for the third consecutive year, Economy Minister Pier Carlo Padoan said on Tuesday, following negative forecasts from Italy's employers' lobby and the Organisation of Economic Growth and Development. With public finances coming under growing pressure due to the weakening economy, Padoan told state broadcaster RAI in an interview that Italy might be able to negotiate a slower speed of deficit reduction with the European Union. "Gross domestic product might be negative this year," Padoan said, adding that he expected a recovery in 2015. Employers' lobby Confindustria and the OECD both forecast this week that GDP would fall 0.4 percent this year, compared with the government's most recent official forecast of 0.8 percent growth. Padoan said the fall in government bond yields would save Italy 5 billion euros in debt servicing costs in 2014, partly offsetting the impact of the shrinking economy on public finances. (Reporting By Giuseppe Fonte, writing by Gavin Jones)