Source: AFP
Italy has slid into recession after the economy shrank 0.7 per cent in the fourth quarter following stringent budget cuts aimed at stabilising the public finances, official data showed Wednesday.
The economy contracted 0.2 per cent in the third quarter and a recession is normally defined as two consecutive quarters of economic contraction. Figures from the Istat data agency showed overall growth of 0.4 per cent for 2011.
The fourth-quarter shrinkage was bigger than expected by analysts polled by Dow Jones Newswires, who had been forecasting a 0.4-per cent contraction.
Under attack by investors on the financial markets over its giant EUR1.9-trillion (US$2.5-trillion) national debt, Italy has adopted several large-scale austerity packages since 2010, which have slowed down economic activity.
The government is currently forecasting a gross domestic product (GDP) contraction of 0.4 per cent this year, but the Bank of Italy has said it expects a shrinkage of between 1.2 per cent and 1.5 per cent.
The International Monetary Fund has said it expects a fall of 2.2 per cent.
Prime Minister Mario Monti, a former eurocrat and economics professor, took over from Silvio Berlusconi in November as the head of an unelected technocratic government charged with rescuing Italy from financial disaster.
He has promised long-delayed structural reforms to boost growth.
