MILAN (AFX) - Bank of Italy governor Antonio Fazio said there are signs of an improvement in the euro zone, with the most negative phase of the economic cycle nearly over. "The most negative phase of the economic cycle in the euro area seems to be in the process of being overcome," Fazio said, adding there are "signals emerging of an improvement in prospects." Among these is a further decline in inflation, he said. He said the current slowdown is affecting mostly manufacturing industry. However, he noted that growth in the US may not exceed 1.5 pct this year -- provided consumer demand remains strong on the back of the recent tax cuts -- while the slowdown in Japan continues and world economic growth is expected to drop to 2.5 pct this year from 4.7 pct in 2000. This would mark "the strongest slowdown since 1974," Fazio said.