Italy cannot find way out of recession

ROME - Agence France-Presse

Italy’s economy shrank by 0.7 percent in the second quarter, with the country wallowing in recession as the eurozone debt crisis bites, preliminary official figures showed yesterday.

The eurozone’s third largest economy picked up ever so slightly after an 0.8 percent contraction of Gross Domestic Product (GDP) in the first quarter, but the results showed the country was still struggling. The figures showed the economy contracted 2.5 percent when compared with the same period of 2011, the national institute of statistics (ISTAT) said.

The continued slump is gloomy news for Italians, who have seen a series of austerity packages, tax hikes and reforms imposed on them by Mario Monti and his technocrat government, as they struggle to battle off the debt crisis. The marginal improvement compared with the first quarter will do little to reassure financial markets who fear the country’s vast debt leaves it open to contagion risks from other countries hit by the crisis. While the government has forecast that the economy will shrink by 1.2 percent this year, the Bank of Italy has predicted a 2 percent contraction and Italy’s business association Confindustria fears a deeper 2.4 percent.