Rome

Italy's housing market, industrial production slump

Debt reaches record high of 2.0347 trillion euros

Italy's housing market, industrial production slump

(By Paul Virgo) Rome, May 14 - The extent of the challenge facing Premier Enrico Letta's left-right government was shown by an array of alarming economic data released on Tuesday. The figures showed that recession-hit Italy's housing market and industrial sector are in crisis, while the nation's public debt hit a new record high of over two trillion euros. Italy's housing market slumped to its lowest level since 1985 last year, according to a report by the country's inland revenue agency and banking association ABI. It said that 448,364 properties were sold in 2012, over 150,000 fewer (27.5%) than in 2011. It was the property market's worse annual performance since 1985, when 430,000 homes were sold. A weak property market is a problem as demand for new houses is the driver of one of the cornerstones of the economy - the construction sector. Industrial production, meanwhile, fell 5.2% in March compared to the same month in 2012, Eurostat said. The European Union's statistics office said this was the worst showing of the continent's big economies. Year-on-year industrial production was down 1.5% in Germany and 1.6% in France in March. ABI also said Tuesday that bank loans to Italian households and non-financial companies dropped 3.1% in April with respect to the same month in 2012, falling to 1.458 billion euros. Overall bank loans, including lending to financial companies and the public sector, decreased by 2.12% to 1.907 billion in April These falls are worrying as attempts to pull the Italian economy out of its longest recession in 20 years will be hampered if households and businesses have trouble obtaining credit. Meanwhile, the Bank of Italy reminded Letta, who was sworn in at the helm of a fragile coalition government in April to end a two-month post-election deadlock, of the headaches he faces with the public finances. It said Italy's huge public debt reached 2.034725 trillion euros in March, beating the previous all-time record of 2.0227 trillion in January. The debt dropped to 2.0176 trillion in February. The debt, the main reason Italy has been exposed to the eurozone crisis, has risen to around 130% of gross domestic product despite government cost-cutting and tax hikes. The central bank said that tax revenues rose 0.79% in the first quarter of 2013, compared to the same period last year, to reach 83.829 billion euros. Istat said Tuesday that Italy's inflation rate fell to 1.1% in April, the lowest level since December 2009, as the recession dampens pressure on prices. The inflation figure was lower than the preliminary forecast of 1.2% that the national statistics agency gave late last month. The fall in April with respect to the 1.6% inflation rate of March was caused primarily by drops in energy prices. Istat said last month that 11.5% of the working population, 2.95 million, were unemployed in March, adding that 38.4% of 15-to-24-year-olds were jobless.

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