EU: Italy in deep recession, record unemployment

Debt and growth cause concern; euro zone to pick up in 2 years

08 November, 10:19

(ANSAmed) - Brussels, November 8 - The economic crisis which has pushed Italy into a 'deep recession' will lead to a 'tepid growth' during which unemployment will peak toa record 12% in 2014, according to a European Commission autumn forecast on Europe's economy registering a deterioration of conditions compared to the spring. The four main economies in the euro zone are facing difficulties: Germany's growth is weakening (with an estimated 0.8% decrease of GDP in 2013), France has stopped growing (0.2% this year and 0.4% next year), while Italy and Spain are facing a deep recession.

Italy's GDP registered a 2.3% decline in 2012 and is expected to decrease by 0.5% in 2013 while Madrid's forecast was -1.4%.

The GDP in euro zone countries is set to decrease 0.4% in 2012 and 0.1% in 2013 against a more positive outlook in May when Brussels had forecast, respectively, a 0.3% recession and a 1% growth.

Growth is expected to return in two years: GDP is projected to increase 1.4% in the euro zone with Italy, together with Spain and Greece, returning to grow by 0.8%. The forecast is slightly more pessimistic than the government's which had estimated a 0.2% recession in 2013 and a 1.1% growth in 2014.

'We know there is a significant slowdown but we also know that already in 2013 it will be possible to see a recovery' which will be 'present from the second trimester onwards', assured Economy Minister Vittorio Grilli, stressing that the negative outlook next year is mostly due to the effects of a lagging economy this year. However, Brussels is concerned. If Italy will be close to a structural budget balance in 2013, provided policies remain unvaried, the situation will change as soon as in 2014. The nominal deficit will decrease much less than expected - 2.9% this year and 2.1% in the next two years - while public debt will increase significantly to 126.5% of GDP in 2012 and 127.6% in 2013. .Although the significant increase of debt is due to the decrease of real GDP and to loans to indebted euro zone countries, the Commission expressed concern for the slow decrease of Italy's debt compared to forecasts also because of the economy's perspectives of slow growth. Growth is in fact hampered by uncertainly and difficult borrowing conditions. EU Commissioner Olli Rehn thus called on Italy to fully implement measures approved for this year and the next and continue efforts to consolidate the budget beyond 2013. And Obama's re-election failed to reassure stock markets after this negative outlook on the euro zone's economy which burnt 100 billion euros: Milan closed down 2.49%, as Madrid at -2.26%, Frankfurt -1.96%, Paris -1.99% and London 1.58%. (ANSAmed)

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