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Italy: third time unlucky

Wednesday, August 06, 2014 - 02:06

Italy slips into recession for the third time since 2008 - with figures showing an unexpected drop in output of 0.2 percent where a rise of the same amount had been expected. David Pollard reports.

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Unlike some of its drivers, Italy hasn't got its foot on the gas pedal. In fact, if anything it's going into reverse. New figures show the euro zone's third-largest economy suffering a triple-dip recession - GDP slipping below zero for the third time since 2008. Output dropped 0.2 percent in the second quarter over the previous three months. A rise of 0.2 percent had been pencilled in by economists. Philippe Gijsels of Fortis Bank says its economy is still struggling - not least of all with structural issues. SOUNDBITE (English) PHILIPPE GIJSELS, CHIEF STRATEGY OFFICER, FORTIS BANK: ''You have an ageing population, you have a very slow-growing economy in the best of cases and I think some of the very harsh measures that a lot of the southern countries like Spain and Portugal and also Ireland probably took did not go down too well in Italy because of political gridlock.'' Official projections for 2014 see growth of 0.8 percent and a deficit of 2.6 percent of GDP. But Prime Minister Matteo Renzi has said conditions might turn out worse than expected - prompting speculation that extra measures may be needed to meet EU budget deficit targets. Italy's economy has been almost stagnant for more than a decade. The Bank of Italy said last month GDP had contracted by 9 percent since the global financial crisis began in 2007. Even so, Renzi is seen as having a strong mandate for reform. Will Hobbs of Barclays. SOUNDBITE (English) WILL HOBBS, MARKET ANALYST, BARCLAYS: ''It feels like the chances of reform have got better in Italy. And some of the sort of things that Matteo Renzi is talking about, they look to be hitting the right kinds of areas. You know, labour market reforms, those kind of things which we really need to see to help labour market fluidity and help that economy become a more competitive actor in the European Union and also the global economy.'' And in fact, amid the gloom there was a glint of light. The latest data shows strong gains in investment and consumer goods - helping deliver a 0.9 percent rise in industrial output for the month of June.

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Italy: third time unlucky

Wednesday, August 06, 2014 - 02:06