* Central bank cuts 2013 GDP view to -1.0 pct from -0.2 * Expects only 0.7 pct economic growth in 2014 * Sees 2012 budget deficit at about 3 pct of GDP * Bad news for PM Monti, highlights challenges for next govt By James Mackenzie ROME, Jan 18 (Reuters) - Italy's central bank cut its forecast for the country's shrinking economy on Friday, as tight credit conditions and a gloomy international backdrop darken the domestic outlook before a national election in February.