Martedì, 23 Ottobre 2018
ROME

GDP data spurs hope Italy emerging from recession

English
© ANSA

(By Emily Backus)
Rome, August 6 - New data on Tuesday from the
Italian statistical agency Istat added to the economic
indicators suggesting Italy's longest recession since World War
II could finally be easing.
Istat on Tuesday reported Italy's gross domestic product
(GDP) fell only 0.2% in the second quarter compared to the first
- better than expected, but still the eighth consecutive
quarterly contraction. GDP was 2% down compared to the second
quarter of 2012.
Istat also revealed that industrial production in Italy
climbed 0.3% in June, rising - however tentatively - for the
second time month-to-month; and automotive industrial production
- a dismal font of news in recent months - soared 7.4% in June
compared to May.
The Italian government indicated that tax revenues have
begun to rise again, and that GDP growth was expected to return
in the third or fourth quarter, although GDP is forecast to
contract about 1.8% for the year.
The latest data comes on the tail of more encouraging
figures from last week.
Italy's July manufacturing purchasing managers' index (PMI)
reported growth for the first time in two years, scoring a
higher than expected 50.4 compared to 49.1 in June.
Italian business optimism soared from June to July at more
than double the eurozone average on the Economic Sentiment
Indicator index.
Italy's unemployment rate dropped to 12.1% in June, down
0.1% on the record high of 12.2% in May, according to Istat.
And earlier this month Istat reported that purchasing power
in Italian consumer households increased for the first time,
quarter-on-quarter, since the fourth quarter of 2010.
The Italian economy showed ''real'' signs of recovery, said
sources close to a meeting held Monday between Premier Enrico
Letta, Economy Minister Fabrizio Saccomanni and Bank of Italy
chief Ignazio Visco.
A Bank of Italy source cautioned ANSA, however, that
recovery is ''gradual'' and ''the daughter of market
stability''.
The central bank pushed for more economic reforms showing
''continuity with choices made'' - a comment that seemed to
point to reforms carried out or planned by Letta's predecessor,
technocrat ex-premier Mario Monti, who also embarked on a series
of austerity measures last year, including public spending cuts,
tax hikes and pension reform.
Monti also outlined an agenda for encouraging economic
growth, including paying off tens of billions of euros worth of
public sector bills due to the private sector, reforming Italy's
rigid labour market and reducing taxes that weigh on workers'
paychecks.
The spread between Italian and German 10-year bond rates
dropped dramatically under the Monti-led government, from well
over 500 basis points when Monti was sworn to 250 basis points
during this January's lows, and has remained under 300 basis
points for most of this year.
On Tuesday, the BTP-bund spread stood at 255 basis points,
and the yield on Italian 10-year bonds was 4.25%.
The spread is a key measure of Italy's borrowing costs and
of investor confidence in the country's ability to weather the
eurozone crisis.
The Bank of Italy's warning to not let up on economic
reforms was echoed by a European Commission spokesperson on
Tuesday, who warned Italy to carry out EC recommendations made
in May and called Istat's GDP data ''expected'' and in line with
general recovery of the eurozone.
Premier Enrico Letta has the difficult task of stimulating
the economy while keeping tight control over public accounts,
and of making political necessities converge with economic
priorities.
Both tasks have been complicated Letta's fragile right-left
coalition.
Government stability was once more shaken last week
following the centre-right leader Silvio Berlusconi's conviction
for tax fraud.
Lawmakers belonging to Berlusconi's People of Freedom Party
(PdL) have threatened to resign en mass, amid calls for
Berlusconi to be granted a pardon.
But on Tuesday, Letta sounded an upbeat note in a statement
marking his first 100 days in office.
The country is ''one step from reversing the path it is on
and exiting from the darkest and most dramatic crisis recent
generations have ever lived through,'' Letta said.

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