6th August 2014
Italy has slipped back into a recession for the third time since 2007 with the economy contracting by 0.2% in the second quarter following on from a 0.1% fall in the first quarter of 2014.
Azad Zangana, European Economist, Schroders says: “The fall in Q2 GDP comes as a surprise as consensus estimates expected 0.1% growth. Few details has been released with this initial estimate, but we know that industrial production including manufacturing fell by 0.4% over the second quarter, while retails sales have been broadly flat. The latest contraction puts the level of Italinan GDP 9.1% below its previous pre-financial crisis peak in Q3 2007”.
“The news will come as a severe blow for Matteo Renzi and his party, who have been slow to implement substantial macro reforms and instead been pre-occupied with politics. Meanwhile, neighbours Spain are putting Italy to shame, as early estimates there show growth of 0.7% in the second quarter.
“It has been difficult to distinguish between peripheral Europe for some time, but what we have seen this year is the outperformance of countries that have implemented structural reforms and improved their competitiveness like Spain and Ireland. Meanwhile countries that have been slow and unwilling to embrace reforms such as Italy and France, have been a drag on the wider Eurozone economy.”