Rome

Italian business confidence sags, output plummets

One in three firms posted losses in 2010

Italian business confidence sags, output plummets

Rome, January 14 - Istat and the Bank of Italy gave more evidence of how hard the recession is hitting the Italian economy on Monday with reports highlighting big drops in industrial production and business confidence. Istat said production fell 7.6% in November compared to the same month in 2011 and 1% with respect to October. The national statistics agency said the seasonally adjusted figure was the 15th consecutive year-on-year drop in industrial output. It added that production was down 6.6% in the first 11 months of 2012 compared to the same period in 2011. The central bank said business confidence continued to be low, with the number of firms reporting an improvement at the end of 2012 3.8%, half that in September. Some 57.5% said sentiment was down compared to 50.6% in September. The economy ministry, meanwhile, said in a report on Monday that more than one in three Italian firms, 33.7%, posted a loss in 2010. The ministry said the figure was actually an improvement on 2009, when 37% of Italian companies posted losses. It said the improvement was due to a "temporary economic recovery" in 2010 before the Italian economy slipped back into a recession that it is still in during the second half of 2011. Another area of concern is Italy's huge public debt, which reached a new record of 2.020668 trillion euros in November, the Bank of Italy said. The debt, which crossed the two-trillion-euro mark for the first time in October and is around 126% in relation to gross domestic product (GDP), is the reason the country has been exposed to the eurozone debt crisis. However, the central bank said that it expected the debt figure for December to go back "under the threshold of 2,000 billion euros". The Bank of Italy said the national debt increased by 113.9 billion euros in the first 11 months of 2012. A big factor was the 23 billion euros Italy had to fork out in contributions to the EFSF and ESM European rescue funds. Bank of Italy Governor Ignazio Visco warned in November that the national debt is destined to stay on an upward trend until Italy manages to balance the national budget. Outgoing Premier Mario Monti's austerity measures aimed to put Italy on course to balance the budget in structural terms this year, although some experts say a supplementary budget may be needed to achieve this goal. His emergency administration's tax hikes and spending cuts have also deepened the recession.

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