THE ITALIAN economy is still contracting, despite very marginal growth in the euro area as a whole, according to revisions to the country’s GDP published by its stats office yesterday.
The economy shrank by 0.3 per cent in the second quarter, the same change as seen in the first quarter, dampening hopes that the country’s slowdown had been moderated. The decline means that the economy was 2.1 per cent smaller in June this year than it had been 12 months earlier.
The country’s economy minister, Fabrixio Saccomanni, took a much rosier view of the situation earlier in the week, suggesting that the country is overcoming its structural issues, and is likely to emerge from recession this quarter.
Ben May, Capital Economics’ European specialist commented: “Given the delicate political situation and the fact that the labour market remains pretty weak, we still expect the economy to remain in recession for some time to come.”
Marchel Alexandrovich of Jefferies International Limited even suggested that Italy was now in a worse economic position than some of its Mediterranean neighbours: “Our case remains that Spain, albeit from a deeper hole, is recovering, while Italy remains stuck”.
France’s industry has also suffered recently, as July’s drop in production was recorded yesterday. Output fell by 0.6 per cent from June, after a 1.4 per cent drop from May. July marks the third month in which industrial production declined, pushed by struggling car firms.
France narrowly exited recession during the second quarter of this year, with a 0.5 per cent expansion, but EU economic commissioner Olli Rehn has previously referred to the country’s taxes as reaching a “fatal level”.
Despite the setback for France’s industry, Daiwa Capital Markets suggests that the drop in production reflects typical monthly volatility and that the sector will record 1.4 per cent growth in the third quarter.