Mercoledì, 24 Ottobre 2018

Italy's recession breaks longevity record


(By Denis Greenan).
Rome, May 15 - Italy's recession has become the
longest on record with seven straight quarterly drops in gross
domestic product (GDP), underscoring the task Enrico Letta's new
government faces in stoking growth while keeping to European
Union-mandated budget restrictions.
GDP fell 0.5% in the first three months of 2013, national
statistics agency Istat said Wednesday.
It is the longest recession since Istat started using
its current GDP calculation system in the first quarter of
Labour Minister Enrico Giovannini called the data "serious"
while Transport Minister Maurizio Lupi reiterated the
government's "moral and political commitment to creating the
conditions for growth".
Consumer associations Federconsumatori and Adusbef said in
a joint statement that they were "extremely worried" about the
data, saying they forecast Italy's GDP would drop 2% this year.
"The only road to take to reverse the trend is to work to
revive domestic demand," said the associations, calling on
Letta's government to avert a 1% rise in the top band of value
added tax scheduled to come into force in July.
But the head of industrial employers' group Confindustria,
Giorgio Squinzi, was upbeat, saying "Italy's decline is not
"I say as a cyclist, you must never stop pedalling," he
Letta has vowed to come up with a pump-priming plan by the
summer and will ask the European Union to exempt spending to
create jobs for young people from the 3% deficit-to-GDP ratio EU
members have to stick to.
He has also said he will work with French President
Francois Hollande to try to persuade Germany to steer the EU
away from austerity policies and onto growth.
The government says Italy is set to hit 2.9% this year,
emerging from a deficit-exceeding procedure, while France
recently got a two-year extension on the deadline to hit the
target set by the EU's founding charter.
In its report Wednesday, Istat added that GDP shrank 2.3%
on an annual basis, worse than most analysts expected.
International observers see another contraction coming next
quarter, albeit a smaller one.
Letta, who took office last month at the head of an
unprecedented left-right coalition, has said stimulating the
economy, expecially to help unemployed youth, is an "absolute
priority" for his fledgling administration.
He hopes to get a helping hand from the EU at a summit at
the end of June.
"Europe must respond to youth unemployment, which has
reached absolutely unsustainable levels," he said. "We ask that
the next European Council summit in June concentrates on an
extraordinary plan for youth unemployment that launches concrete
measures immediately", Letta said earlier this week.
Nearly 40% of Italian youth are unemployed, according to
Giovannini, who was Istat head until joining the
government, said this month Italy's economic crisis was the
worst since the founding of the republic after the Second World
Last week Istat said it expects GDP to drop 1.4% this year
following a 2.4% fall in 2012.
The Italian government forecast issued by Letta's
predecessor Mario Monti saw GDP shrinking 1.3% this year, but
analysts say this is optimistic.
Economy Minister Fabrizio Saccomanni reiterated earlier
this week Italy would meet the 3% target.
But the Organisation for Economic Cooperation and
Development said the deficit would be 3.3% of GDP this year and
3.8% in 2014.
The public debt will hit a new record of 131.5% of GDP this
year, the OECD said, and 134.2% next, rather than falling to the
129% forecast by the government.

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