Rome

Italian recession refuses to relent

Confindustria blasts austerity, while OECD notes recovery signs

Italian recession refuses to relent

(By Christopher Livesay) Rome, June 10 - New economic figures Monday showed Italy still has a tough row to hoe in order to emerge from what's considered to be the worst crisis since World War II. Italy's gross domestic product (GDP) shrank 2.4% in the first quarter of 2013 compared to the same period last year, while GDP fell 0.6% compared to the last quarter of 2012, national statistics agency Istat reported on Monday. Istat thus shaved 0.1% from its previous estimate on May 15, when it calculated that Italy's GDP in the first quarter contracted 2.3% on an annual basis and 0.5% from quarter to quarter. The agency said the new estimate translates into an economic contraction of 1.6% for the year compared to 2012 - if there is no further economic variation in the remaining quarters of the year. As the recession endures, economists are increasingly blaming austerity measures put in place since the country's debt crisis risked spiraling out of control in 2011. The head of the powerful Italian industry federation Confindustria on Monday blasted the previous administration of Mario Monti, a respected economist and former European commissioner, for its series of cuts and spending reductions last year, and warned that more austerity was unlikely to provide answers to the country's current economic woes. "If rigor and austerity reduce our social fabric to its knees and the patrimony of our companies to the point where others can come shopping and take home our best pieces at discount prices, we must say no," Confindustria President Giorgio Squinzi told a conference of the federation's Lombardy branch, Assolombardo, in Milan. Squinzi warned that the accepted wisdom touted by Italy's European partners and the International Monetary Fund had only aggravated Italy's economic squeeze. "By accepting monetarist cliches, we ended up compromising our domestic market, abiding by the dictates of austerity as an end in itself and aseptically accepting to reduce the GDP-debt ratio, without any economic logic to accompany this choice," " Squinzi said. The policy has even failed to achieve its original aim, he added. "When the Monti government took office, the debt-to-GDP ratio was 117%," he said. "Now we are at 127% and the forecasts for this year take us to at least 132%". Some bright prospects remain on Italy's economic horizon however. The Organisation for Economic Cooperation and Development (OECD) on Monday confirmed a "positive change" taking place in Italy's economy. The OECD noted in its June index of leading indicators signs of the recession easing in Italy and "moderate growth improvement in most big economies". The Paris-based organization said signs of recovery were continuing to manifest in the eurozone and that Germany's growth was returning to trend. The United States and Japan were the only countries where growth is firming, the report said.

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