ROME - Italy is preparing to cut its economic growth target for this year to 0.8%, from 1% set in April, sources familiar with the matter said, signalling a progressively worsening outlook for the euro zone's third-largest economy.

Just four months ago Economy Minister Giancarlo Giorgetti forecast growth this year would be as high as 1.4%.

That was before gross domestic product (GDP) shrank by 0.4% in the second quarter from the first and industrial output was weaker than expected in July, getting the third quarter off to a faltering start.

The cabinet is expected to meet on Wednesday to unveil a raft of economic targets in the Treasury's annual Economic and Financial Document.

The outlook for next year is also softening. Under current trends, the Treasury forecasts the economy will grow by 1% in 2024, the sources said, down from a 1.5% projection last April.

However, the final growth target for next year will be somewhat higher, they said, as Prime Minister Giorgia Meloni plans to adopt expansionary measures to prop up the economy in her upcoming 2024 budget.

(Reporting by Giuseppe Fonte, editing by Gavin Jones and Susan Fenton)